Implications of white farmers compensation

Ceteris Paribus:Respect Gwenzi

A DEBATE over the land question has been raging since the land invasion in the formative years of the century. The debate has scaled up following South Africa’s resolve to also follow a similar path of land expropriation but without compensation. After a protracted 20-year period, the government of Zimbabwe has elected to compensate the displaced white farmers but emphasising that the compensation will be for upgrades done on the farms before seizure. There is a serious backlash from different quarters including the opposition and some of liberation war veterans as well as general citizens.

The section which is against the compensation deal argues that the white settler farmers were supposed to have returned land and be compensated by the British government, citing that this was part of the Lancaster House Agreement struck in December 1979 as part of a war ceasefire leading to the majority rule in 1980.

This narrative was commonly cited by former president Robert Mugabe who oversaw the land invasion. The other argument against compensation is that the land invasion itself should have seen white farmers and their respective home countries compensating for the invasion and ceding part of their land.

Indeed, the subject has been very emotive considering the loss of life during the war and during the reciprocating invasion, loss of economic value during colonialism and in the process of invasion. Further loss of economic value post invasion as seen through Zimbabwe’s weakening GDP in successive years largely dragged by the underperformance in the agriculture sector. The sector historically anchored the Zimbabwe economy as a contributor to at least 30% of the country’s gross national product and its contribution has since dwindled to below 15%. The dearth in contribution is attributed declining production and low yields in key crops, notably in the staple, maize product.

The economic implication of a rushed and ill planned land invasion cannot be overstated. Post the invasion, the economy has undergone massive depression and recessions and has failed to move beyond the implications of the move. The key challenge has been on production and productivity. New farmers have failed to scale up production and productivity to viable levels and levels matching the former predominantly white farmers. Maize yields for Zimbabwe are seen at been one tonne per hectare, which is way below the regional average of over three tonnes. South Africa which has a predominant white farming community occupying land has average yields of over 10 tonnes.

While maize tonnage has gradually improved, food sustenance has not been guaranteed. The country is presently a net importer of maize, rice, flour and other key agricultural produce. This is in contrast to early years of independence where the country was a net exporter of agriculture produce in the region. The new farmers largely have no technical know-how of farming and lack the necessary inputs and funding to profitably till the land.

If these factors could be dealt with, the net outcome will be a better yield and high production levels which could guarantee food sufficiency, avert hunger levels seen at over 50% of total population as well as reduce dependency on imports. Essentially a robust agricultural strategy will stabilise the economic situation since the sector through value chains is essential to the outperformance of other sectors, such as, manufacturing irrespective of the colour of the farmer.

However, the main concern with regards to the agricultural sector has been government’s complacency and failure to deal with security of property. Land titles have been outstanding and banks have been reluctant to offer credit where no guarantee of going concern is missing and no collateral is provided.

Back to the aspect of compensation, it is apparent that redemption of the sector is not dependent on returning the land to white farmers neither is it dependent on compensation for upgrades. It is largely an endogenous function of policy and reforms that promote productivity and governance. We, however, are alive to the existence of Zimbabwe in a global community and the need to adhere to agreed statutes in order to guarantee international trade, attraction of international capital as well as avert some sanctions.

It is imperative that government compensate the white farmers but with a different funding mechanism as has been tabled to date. The current financing eats into Zimbabwe’s future and diminishes prospects of economic growth in posterity.

Gwenzi is a financial analyst and MD of Equity Axis, a financial media firm offering business intelligence, economic and equity research. —