Parliamentary death knell for investment
By Eric Bloch
THE state-controlled media displayed a frenzy of ecstasy last week, reporting on the passage through parliament of legislation to amend the Constitution of Zimbabwe.
upon joyous hysteria, they waxed eloquently as to how great an historical event had occurred, and how the majority of the legislators had rejoiced with song and dance that they had successfully brought about constitutional amendments which preclude any who may be subjected to a state-acquisition of agricultural lands from resorting to the courts to seek protection from such an act of acquisition. It is unfortunate that they did not realise that they were actually rejoicing at having driven yet another nail into the economy’s coffin and that in all probability they were singing and dancing on the about-to-be grave of the Zimbabwean economy.
Very clearly, neither the jubilant legislators nor the governmental media (possessed of an absolute belief as to their master’s infallibility) appreciated the dire consequences and appalling repercussions of the changes effected to the constitution.
The first of the consequences is that many, if not most, of Zimbabwe’s people, and of the international community, will read into the passage of the legislation a clear sign that the Zimbabwean government considers itself to be “above the law” and, to all intents and purposes, to be a law unto itself. After all, the ruling party which constitutes the government has legislated to prescribe that the courts cannot be resorted to for any form of protection against governmental act of expropriation of lands that itself has gazetted for expropriation. In other words, its determination is absolute and unchallengeable.
That dismal, and yet undoubtedly well-founded perspective, is reinforced by the fact that the constitution has, since Zimbabwean Independence, been intended to be the entrenchment of protection for the population.
Without in any manner denigrating the other provisions of the constitution, overriding importance has always been attached to the Declaration of Rights contained in it.
That declaration states: “Whereas every person in Zimbabwe is entitled to the fundamental rights and freedoms of the individual, that is to say, the right whatever his race, tribe, place of origin, political opinions, colour, creed or sex, but subject to respect for the rights and freedoms of others and for the public interest, to liberty, security, protection of the law, freedom of conscience, of expression, of assembly and association, and privacy of his home and other property.”
By now prescribing that land acquisition falls outside the protective domain of the courts, the legislators supporting that prescription have effectively declared that they are empowered to override the constitutional entitlements of all freedoms and of protection of the courts from any abuse of those protections. In fact, one must ponder whether or not the enactment of the constitutional amendments was not an act in breach of the constitution, for that enactment constituted a withdrawal of constitutionally prescribed protection.
Therefore, all must ask whether or not the constitution provides any protections, for if one can be removed by a body of parliamentarians, in disregard for previously expressed disapproval of a majority of the electorate (in the February 2000 referendum), will not others be removed in the future without consideration as to whether or not that be the will of the people?
This concern will certainly impact very greatly upon most who would, or could consider investing in Zimbabwe — be they foreign investors or domestic ones.
Suddenly they are imbued with a fear that, if today government can deprive whomsoever it wishes of ownership of agricultural lands, will it not likewise do so in the future to those possessed of mining properties, tourism developments, factories, office properties, residences or any other lands and improvements thereon.
And if that could be so, then could not a future government similarly resolve to acquire privately-owned assets situate within those properties — be it plant, machinery and equipment, stock-in-trade, or otherwise.
Although it is probable that any such action is the furthest possible thought in the minds of government today, nevertheless that cannot, and does not, reassure possible investors. After all, if government has unhesitatingly taken such an action once, it can surely decide to do it again and again in the future.
This concern is still more greatly intensified by the almost never-ending emphasis upon achieving “black economic empowerment” by legislative enactment, instead of by motivation, incentivisation and facilitation.
There are recurrent political statements of imminent promulgation of legislation of prescribed levels of indigenous participation in the equity of mines and of other economic enterprises without any concurrent indication as to the basis thereof. In particular, naught is said to assure those who will be required to part with equity that they will receive fair value compensation for the equity.
One of the prerequisites for the “economic turnaround”, that has been desperately desired by virtually all Zimbabwe for the last eight years, is that there be very substantial investment into almost all economic sectors.
Investment is the catalyst for employment creation, technology transfer, foreign exchange generation and economic growth. However, some really dramatic measures will be necessary to instil in prospective investors any sense of confidence that any investments that they may make will be secure and not become suddenly subject to forfeiture, in whole or part, to government or such others as government may, even if only from political whim, decide upon.
This is especially so as, over the last five years, government has contemptuously disregarded the Bilateral Investment Protection Agreements (Bipas) which had been entered into, subsequent to Independence, with Germany, the Netherlands, Belgium, Italy and Mauritius.
Farms lawfully acquired by their nationals and many conservancies have been subjected to the provisions of the Land Acquisition Act, and virtually all diplomatic representations for compliance with the Bipas appear to have been fruitless.
Admittedly, the governor of the Reserve Bank of Zimbabwe, Dr Gideon Gono, has courageously urged publicly that the Bipas be honoured, and as recently as in the last opening of parliament by the president, he said that anomalies and irregularities relative to acquisition to which Bipas pertain would be corrected, but as yet such corrections have not occurred.
There are even instances wherein the courts (prior to the amendment of the constitution) have ordered that unauthorised settlers on certain Bipa-protected lands be evicted, but in virtual contempt of court, the authorities have failed to evict them, or even to attempt to do so.
Yet another disastrous consequence of the passage of the constitutional amendments, and of the joyous parliamentarian reactions to that passage, is that many of the remaining few commercial farmers who have not been deprived of their farms, and who have been key players in producing much of the crops of the last few years, will now be demotivated and demoralised in the extreme.
Tobacco production has fallen from 237 million kg in 2001 to 85 million kg in 2005, whilst in the same period maize production fell from 1,8 million tonnes to about 650 000 tonnes.
However, a very large proportion of that which was produced came from the long-established commercial farmers, for many of the new farmers were without the promised, but not forthcoming, resources and inputs, and others had little or no inclination to farm for so long as they could survive by disposing of improvements that their predecessors had effected to the farms.
Agriculture has always been the foundation of the economy, and although the levels of agriculture have declined cataclysmically, so too has the economy as a whole, and therefore agriculture has remained an important element.
But now its further marked contraction is almost inevitable, with resultant further weakening of the economy.
In fairness, it is possible that those of the legislators, who so strongly welcomed and enabled the constitutional amendments, were unaware of the devastatingly bad economic consequences, but those consequences are now a near inevitability.