Credibility key to economic revival

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THE message that credibility is the key to economic revival seems to be getting across to our new government. However, there is lack of alignment in the white farmers’ compensation promise.

Credible elections

Fortunately, the new government in the case of elections is beginning to understand the difference between a political rally and an investor road show.

On Monday, Foreign Affairs and International Trade minister Sibusiso Moyo held a workshop for the heads of diplomatic missions in Zimbabwe. He reiterated the message of his principal that the government intends to hold credible, free and fair elections this year, between June and August.

It is not so difficult to discern why the minister would invite heads of diplomatic missions to rehash the message that there was no military takeover in November last year and that credible, free and fair elections would be held as promised. If you summon envoys as a high-level government official, you know your message will be relayed to the leadership of the countries represented. Moyo’s boss, on the same day, was showering praises on the newly-elected Zimbabwe Electoral Commission chairperson Justice Priscilla Chigumba for giving the assurance that elections would be credible. Further, the president on the same day, through social media, referenced his inaugural speech, pointing out that the promise of holding credible, free and fair elections was no ruse.

The sub-text is clear: The president is saying he has been consistent from day one and so he deserves to be trusted to make good on his word. Zimbabwean delegates to the African Mining Indaba in Cape Town on the same day echoed a similar message, arguing that a credible election was the prerequisite to investor dollars taking the trip to Zimbabwe from the hallowed citadels of international capital. An orchestrated strategy to communicate the same message from different institutions is apparent. Trust us: government seems to be saying. Government now knows too well that international capital wants credible elections as the first milestone to unlock funding for Zimbabwe. It is not the ritual of elections that potential providers of capital are looking for; they want a stable government whose legitimacy will not be challenged. Such a government has the potential to protect foreign capital.

If government delivers on the promise of facilitating free and credible elections, its trust stock will rise, but not very much. Potential investors will want more. So our government should wake up to this reality: delivering a credible, free and fair election will not be the be all and end all. It will be only an admission ticket into the game

Corruption

On the same day our government was launching a multi-pronged public relations bombardment on its commitment to ensure credible, free and fair elections, the Zimbabwe Anti-Corruption Commission (Zacc) was arresting a top official accused of allegedly converting US$1,5 million meant for the United Nations World Tourism Organisation conference to personal use.

It was reported that Zacc was looking to arrest the former tourism minister Walter Mzembi in connection with this alleged abuse of funds. You cannot miss the subtext: government is trying to show the world that it is not about just talk and no walk on stamping out corruption. It is a message designed to tell specific institutions such as the Commonwealth, Wall Street, Washington, Westminster and Bretton Woods that government is serious about rooting out corruption by going even for the big guns.

Commonwealth requires commitment to fight corruption without fear or favour as a pre-requisite for membership. If Zimbabwe cannot be re-admitted into the Commonwealth, it will signal that Zimbabwe is not yet ready to fully embrace free market policies, with the talk of protecting capital being mere cheap talk. Expect a few more high-profile arrests by Zacc and suspects being arraigned before our courts

Compensation

On Monday, our country’s CE restated his promise that his government will compensate white farmers as spelt out in our constitution. The constitution, the supreme law of our land, states that only improvements on the land shall be compensated, not the land itself.

Finance minister Patrick Chinamasa last year clarified that land acquired under Bilateral Investment Promotion and Protection Agreements (Bippas) is subject to compensation. This policy matter needs to be coded into our Land Acquisition Act, the law that deals with compensation.

President Emmerson Mnangagwa’s talk at the launch of the Zimbabwe Business Club that we need to be patient as government translates policy statements into law. There is a problem here: this is an inside-out approach. He should think outside in – translate the top concerns of potential investors who need to see policy commitments protected in the law. Speed is of essence here.

There is another problem: our government does not know the quantum of the compensation for improvements on acquired farms.

However, the white farmers through an umbrella body contracted a consortium of valuators to detail all the assets, movable and immovable on almost every farm that was acquired, map the farms and store this information on a database. The data the government wants is available.

In the spirit of inclusivity being touted by the new government, the president should invite the valuation consortium to work with it to do the costing of farm improvements. When I discussed with a leader of the valuation consortium some time ago, I learned that a sticking point is agreeing on a method to value the assets. The chief point of contention is that the method of calculating the compensation preferred by the government is not standard and thus heavily undervalues the improvements on land when compared to the commonly accepted methods of valuation. It is in the national interest for the government to make a policy pronouncement that it will adopt one of the commonly accepted methods of valuation.

Mnagangwa’s repeating of his promise to compensate land forcibly acquired by government was calculated to relay the message that government is undertaking to abide by the rule of law and favours free markets. In order for his message on compensation to be fully credible, he must realign the compensation clause in the Land Acquisition Act to show that valuation of improvements on land will be done in a fair way, with the standard of fairness being adoption of commonly accepted methods of valuation. He needs to follow up on Chinamasa’s clarification on Bippa farms and tell the world that our law says so.

The issue of compensation is deeper than our government is currently imagining. Our national debt, standing at US$13 billion as revealed in the 2018 budget statement, excludes the compensation obligation. Our debt is heavily understated. The president should make sure that his government makes it a top priority to quantify the compensation debt, including accrued interest. Doing this is a clearer demonstration that our government is very sincere that it adheres to the rule of law. When as a nation we understate our national debt, by not including the compensation debt, we chip away at our credibility.

Mnangagwa has proffered two proposals for funding the compensation. He recently told Bloomberg that he would sell Eurobonds to raise money. He is also trying to cajole the British Prime Minister Theresa May to honour the promise made by her political ancestor Margaret Thatcher to fund the compensation. Both options depend on whether our government will be perceived as credible to abide by free market tenets.

Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer reviewed international journal.

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