Industry and Commerce Minister Sekai Nzenza this week said she is set to embark on the rather overdue reform of the sugar industry long regulated by the Sugar Production Control Act of 1964 which has created a monopoly out of ZSE-listed Tongaat Hulett.
The South African company controls the whole sugar industry which, since 2000, has been invaded by hundreds of indigenous players who also pine for a fair share of the cake. The new farmers cite unfairness in the way sugar wealth is distributed, claiming that after paying all the costs and settling the taxes and overheads that go with the production of sugar cane they are left with only a small fraction of their earnings. This, they allege, is because of the Tongaat Hulett monopoly.
The government has, according to the minister, acknowledged this anomaly and Tongaat Hulett itself has said it is amenable to any transformation of the industry that benefits all the stakeholders and the country at large. That’s a good beginning but caution is very important in whatever methods get employed in this important endeavour. True, the Act that regulates the industry is a colonial era piece of legislation, but during the excitement that comes with expunging colonial legacies, caution should not be thrown to the wind.
The puzzle facing Nzenza should be how to break down the Tongaat Hulett monopoly without destroying the sugar industry. In this she has the benefit of hindsight. The events beginning in 2000 when Zimbabwe set out on an omnibus land-reform programme provide many lessons. Being populist and pushing the demands of the new players in the industry, especially the farmers who feel hard done by the Tongaat Hulett’s dominance, and those hovering around to grab a share of the land, is the reaction expected of any politician with votes in mind especially with 2023 elections round the corner.
This is what instructed the land reform programme of 2000, but that act of populism, disguised as nationalism, created needless destruction in the farming sector because wrong people were placed at the forefront. It created a breed of landowners who occupied prime farmland for posterity, only to trigger food insecurity that has haunted Zimbabwe for 21 years.
The bloody revolution destroyed big corporations that depended on a strong agricultural sector for raw materials. Zimbabwe’s gross domestic product plummeted by 50% between 2000 and 2008 after the reforms grounded exports and created forex shortages. Inflation hit frightening levels in 2008 of 500 billion percent. Key estates such as Kondozi in Manicaland collapsed, sending over 350 000 workers and stakeholders, including downstream industries, down the swamp.
It will be unmitigated madness if Nzenza and everyone involved throw these lessons away and make the same mistakes as she leads this very important transformation. Zimbabwe must actually expand with Tongaat Hulett while it executes the reforms. The new farmers must enjoy the benefits of recent investments by Green Fuel into ethanol production while they negotiate with the big corporations how the resource should be redistributed to benefit everyone.