Agricultural revival lessons from Zambia

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LAST week, the Commercial Farmers’ Union sounded said the supposedly revamped 99-year lease for Zimbabwe may not be attractive enough to lure back commercial farmers who were hounded out of Zimbabwe at the dawn of the new millennium. This is very concerning, given that agriculture provides the lever for resuscitating our agro-based manufacturing exports.

The Brett Chulu Column

Zambia versus Zimbabwe

Our northern neighbour, Zambia, hosts the largest number of our former commercial farmers who found refuge in that country.
Available information points to at least 200 former Zimbabwean commercial farmers successfully contributing to farming output and exports, especially the “golden leaf”, tobacco. When these farmers entered Zambia, they were welcomed as investors. They responded in kind, out-producing the incumbent farmers by as much as 250%, contributing 70% to total output.

What is intriguing is that the land tenure systems of Zimbabwe and Zambia are practically similar. The irony is that though the land tenure systems are analogous, the Zambian system is more attractive to farming investors. Cases in point: a Saudi Arabian investor is pouring close to US$200 million to start a pineapple growing venture in Zambia.

One of South Africa’s largest sugarcane farming consortiums is all but certain to start a sugar cane growing venture in Zambia. You have to ask hard questions as to why Zambia seems to a darling of the international farming investor and Zimbabwe is ignored, given that we have comparable land tenure systems.

Zambia nationalised land at the dawn of its political independence; abolishing freehold tenure in favour of leasehold contracts. This was an outgrowth of the socialism ideology on which the first government of Zambia rested upon. Zambia’s law on land states that all land belongs to the state with the head of state having the power to distribute land to anyone as is deemed fit on leasehold basis, with 99-year leases being standard, though there is a conversation in Zambia beginning to swell around the notion of reducing the lease period to 25 years. This is no different to our current law on land; the state holds a monopoly on land distribution. So why do our former commercial farmers?

The policy of the Zambian government allows leases to be transferrable. Let me hasten to say the relevant law on land in Zambia does not expressly allow transferability and tradability of leases.

However, in practice, the Zambian government tacitly permits transferability of leases. One of the biggest former commercial Zimbabwean farmers acquired close to 1 600 hectares of land in Zambia for lease from the local chiefs. The Zambian government did not object.

Contrast this with the gloomy ballad narrated by the former Zimbabwean president at the zenith of the controversial youth interface rallies last year. He excoriated indigenous Zimbabwean farmers for leasing farms to former white commercial farmers.

In his typical satirical oratory, he narrated a tale from a book he had read in his formative years — the saga of a camel that tricked its master out of a tent and occupied it. It would appear that the new government still has a dalliance with the “camel must not occupy” philosophy on land. Zambia allows the master to lease the tent to the camel. Period. So be it here.
The untold story

What many may not be alive to is that the transferability of 99-year leases in Zambia was not the most decisive factor in transforming agriculture there. Our former commercial farmers started from scratch, scouring for funding from Zambia and abroad.

An interesting case in point is that of one the most successful erstwhile commercial farmers in Zimbabwe before the forced exodus from Zimbabwe to Zambia. He sourced US$900 000; partly coming from a tobacco company in the US and from the European Investment Bank.

Ironically, our government owes tonnes of money to this bank. It was the farmer’s impressive track record at growing tobacco in Zimbabwe that convinced international funders to give him the money. Farming business is a complex enterprise. Some international farming investors also get insurance from a World Bank-related entity to underwrite the risk of farm disturbances. Here is my point: largely, the former Zimbabwean commercial farmer used their own good credit history and convincing business plans to get money from international financiers; local Zambian capital credit markets did not help much.

What may also be unfamiliar is that many of the former commercial farmers who left for Zambia did not start their own farming operations, opting to be employed as managers on the farms of their counterparts who had managed to source capital to restart. It must be remembered that these farmers were not allowed by our past regime to take their machinery; they had to start from scratch. It was a case of the survival of the fittest; not all former commercial farmers had personal international connections to help them recapitalise. The notion of racial priviledge is misplaced. It is largely an excuse for mediocrity and cheap political point-scoring. Business is business. Funders fund success, not dreams.

Way forward

First, government must dump the “camel must not occupy” thinking immediately. It needs to ink it on paper that leases of land are transferable. That will be a masterstroke. It costs zero dollars. Though this is not a sufficient condition, it is a necessary condition to help reduce the credit risk of farmers.

Second, government must never forget that the former commercial farmers who left Zimbabwe were not allowed to take some of their major equipment. In all honesty, government is complicit in vaporising the capital commercial farmers had. In that vein, government must speed up compensation for farm improvements and moveable equipment that the former commercial farmers lost to invasions. The farmers need this as part of their start-up capital.

The former commercial farmers will not find it easy to borrow from local commercial markets because they will have no title to land. The best they will get will be short-term loans based on their farming output. This is exactly what has been obtaining in Zambia when it comes to indigenous farmers who have no title to land; credit facilities based on output have been the best banks can offer, very token in nature.

It is imperative that government compensates in full as per our law. The message that Zimbabwe is open for business is likely to be a hard sell to former commercial farmers whose capital was destroyed at the height of farm invasions. Government must say “Here is your compensation. Please come and invest it here again, Zimbabwe is open for business.”

Third, our government must know that as long as we have not cleared our debts to the Paris Club and the multilateral institutions, our current and former commercial farmers will not get funding from abroad. These commercial farmers may have the required track record to get medium-term and long-term funding, but our high country risk will always make them unattractive to lenders.

Government must reform the whole political and economic system; it is a systemic problem we are dealing with. Political and economic reforms are Siamese twins. These reforms are what will deliver favourable country risk. Country risk is always a leadership metric; it is the stock price of national political leadership.

Former commercial farmers have the skill, but no longer have the capital. Government has the land, but has no skill and capital. Government and the one-time commercial farmers must find each other. Government must take the first credible step.

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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