Old Mutual to oppose latest Moyo court bid, intends to appoint new CEO – The Zimbabwean

Former Old Mutual CEO Peter Moyo and chair Trevor Manual. Image: Grafika24

The financial services provider on Tuesday issued a statement indicating it plans to oppose the urgent court application lodged by Moyo at the Johannesburg High Court on Friday, February 14, 2020.

“Old Mutual’s lawyers have reviewed Mr Moyo’s latest application and have confirmed that the application is based on a mistaken understanding of the legal position.

“Old Mutual will oppose the application and has been advised that there is no reason why it should not continue with the process to recruit a permanent CEO in the interim. It intends to do so,” the statement read.

“Mr Moyo is entitled to raise his arguments in court. Old Mutual will deal with those arguments in court and will not litigate through the media,” Old Mutual said.

The matter is to be heard on March 10, 2020 and Old Mutual has until February 20 to file a notice of opposition.

According to his court papers, Moyo claims that he would suffer further reputational harm if a new CEO is appointed at Old Mutual. “My reputational rights will also be severely affected should a new CEO be appointed while I am in court to be reinstated to the same position,” he said.

“If the relief sought is not granted and Old Mutual goes ahead and hires a CEO, then the harm of permanently losing my employment is irreversible,” he said. “My right to work, dignity and self-worth cannot be replaced by money,” he added.

Moyo further asserted that the matter would not only prejudice him but other Old Mutual stakeholders such as employees and policyholders.

Old Mutual, however, has hit back at this allegation and said it will continue to act responsibly and remain focused on its core business and protecting the interests of the company and its stakeholders.

Moyo had been suspended from the company in May 2019 and was dismissed in June 2019, over a breakdown in trust and a conflict of interest related to NMT Capital – a boutique investment firm he co-founded. Moyo has challenged his dismissal through the courts and the matter has been ongoing for months.

Post published in: Business

Caritas Zimbabwe feeds 300 000 drought-affected persons – The Zimbabwean

Caritas Zimbabwe working in collaboration with Caritas Internationalis and the World Food Programme (WFP) have distributed food to 300 000 drought-affected persons.

Caritas Zimbabwe has pledged to continue fulfilling its pastoral mandate of accompanying vulnerable communities in the country. This time around, this solidarity is being demonstrated through emergency food aid distribution.

The organisation’s projects are not only looking at short-term immediate food needs, but Caritas Zimbabwe is also providing seed and complementary agronomic training aimed at long-term agricultural recovery.

Zimbabwe has declared a State of National Disaster

The Zimbabwe Drought Response has come at a time when much of the country’s eastern provinces are recovering from the devastating effects of Cyclone Idai. As if Idai was not bad enough, the country is now facing a second complex food emergency: Last year’s poor harvest, adversely affected by Cyclone Idai, severe drought as well as economic challenges has led to a critical food crisis. The Government of Zimbabwe on, 6 August 2019, declared “a State of National Disaster” which opened doors for international assistance.

Collaboration with Caritas Internationalis

Caritas Internationalis launched the Zimbabwe Drought Response emergency appeal on 15 January 2020. The Zimbabwe Bishops conference had earlier resolved that Caritas Zimbabwe with the support of Caritas Internationalis launch an emergency appeal to respond to the calamity.

Caritas Zimbabwe Bishop-President, Archbishop Alex Thomas, of the Archdiocese of Bulawayo then contacted Caritas Internationalis to help orchestrate the appeal.

“It is regrettable that the Cyclone Idai emergency came at a time when the whole country had already been affected by drought resulting in a near-total maize crop failure in the 2018/19 season. At this time even for the few who had harvested something. also have their situation worsened because the little food from own production has already been depleted. At the local level, we have started to mobilise the faithful to support the survival of the vulnerable people; however, the magnitude of the problem has gone beyond our capacity to intervene. Unless external assistance is given, this may lead to starvation…. Therefore on behalf of the people and Bishops of Zimbabwe, I highly recommend this application for your positive consideration,” the Bishop wrote.

Rural communities are most vulnerable

The Zimbabwe Drought Response appeal seeks to address the primary food insecurity problem facing rural communities in Zimbabwe. The appeal is twofold: Contribute to reduction in current urgent food needs and promote future food security.

The appeal is feeding 17 000 vulnerable people in six most food insecure Dioceses of Hwange, Bulawayo, Gweru, Gokwe, Chinhoyi, and Masvingo. Harare and Mutare Dioceses have been spared from the appeal because other funding partners have opted to have bi-literal agreements to support them.

More than USD 1 300 000.00 needed

The drought response project will provide a blanket in-kind food distribution for eight months (until September 2020). The food basket contains grain, pulses (e.g. beans, lentils and peas) and oil at the following quantities standardised to align with WFP food expenditure basket composed of 7.5kg of grain per person per month; 0.5kg of pulses per person per month and 0.75kg of vegetable oil per person per month.

The total budget for this food security Appeal is USD 1, 332, 439. 00 (EURO 1 017 915. 00). To date, the appeal has received pledges of up to 140 00 USD and only 10 000 USD. Caritas Japan, Caritas Australia and CAFOD have pledged US$10 000.00, 50 000.00 pounds and US75 000.00 respectively.

Collaboration with WFP

In similar food security projects, Caritas Zimbabwe is being supported by the World Food Programme to feed 261 699 individuals for four months ending April 2020 in the Districts of Gutu, Chivi, and Beitbridge in Masvingo diocese. In addition, Hwedza, Marondera, Chikomba, Murehwa in the Archdiocese of Harare then Umzingwane and Matobo in the Archdiocese of Bulawayo.

Zimbabwe threatens to withdraw mining licenses over unpaid fees – The Zimbabwean

Mining is the biggest earner of foreign exchange in the southern African nation, which hopes the sector will help anchor a revival from the worst economic crisis in a decade, marked by shortages of foreign exchange, food, fuel, electricity and medicines.

Zimbabwe holds the second-largest known reserves of platinum and large deposits of lithium, gold and chrome but has struggled to attract new investors who fret over power shortages and whether they can take their money out.

Mines Minister Winston Chitando, who has previously accused some companies of holding mining concessions for speculative purposes, said the government was owed at least 200 million Zimbabwe dollar (US$11 million) in annual fees as of Jan. 30.

Under Zimbabwe’s laws, companies have to pay an annual fee to keep their concessions.

“The 200 million (Zimbabwe dollar) relates to that mining title where the owners or holders have not been observing or are in arrears as far as payment of the mining title is concerned,” Chitando told reporters during a post-cabinet briefing.

He did not give any details on which mines or companies were in arrears.

But Information Minister Monica Mutsvangwa said that “those who owe money are being given until April 30 to pay up, failing which the mining title will be lost”.

Post published in: Business

Zimbabwe central bank leaves rates unchanged, bullish on inflation – The Zimbabwean

Mangudya

Zimbabwe is struggling through its worst economic crisis in a decade, with prices of basic goods soaring and shortages of medicine, fuel and electricity worsening. Hopes of a quick recovery under President Emmerson Mnangagwa are fading.

The worsening poverty is upsetting the fragile calm that’s prevailed since the 2017 coup that toppled long-time ruler Robert Mugabe.

After suspending publication of annual inflation data, which economic analysts put at 525% in December, authorities will resume printing the figures next month.

Governor John Mangudya was bullish on inflation, projecting that annual price growth would dip below 50% by the end of the year. Monthly inflation fell in January to 2.23%

“Our task is we stabilize inflation and stabilize the exchange rate. We expect month-on-month inflation will continue to come down until the end of the year,” Mangudya said.

“Most of the inflation is caused by non-monetary factors. That is expectations – that ‘I lost money in 2008’,” Mangudya said. “This is a once-beaten, twice-shy scenario. These are things that shape inflation in Zimbabwe.”

Zimbabweans have little confidence in monetary policy after pensions and savings were wiped out at the height of hyperinflation, which reached 500 billion% in 2008 and forced the country to dump its local currency.

Last year in June, Zimbabwe ended a decade of dollarisation, which fuelled inflation. Mangudya said it would take up to five years to completely wean Zimbabwe from using the U.S. dollar in local transactions.

Seeking to reassure investors, the governor said foreign currency accounts held by companies, donors and individuals were safe, while businesses like mines would continue to receive a portion of their export earnings in dollars.

To ease shortages of cash, the bank will feed higher- denomination Zimbabwe dollar notes into the economy while increasing transparency on foreign currency trading to stabilise the exchange rate.

The central bank governor said he still saw economic growth at 3% in 2020, citing improved rainfall since mid January. (Reporting by MacDonald Dzirutwe, writing by Mfuneko Toyana; editing by William Maclean, Larry King)

Post published in: Business

Zimbabwe Central Bank to Settle $1.2 Billion of Legacy Debt – The Zimbabwean

Settlement of the verified foreign debt will be amortized over an extended period, “with forex-denominated savings bonds” being issued to some of the creditors, the central bank said in its monetary policy statement Monday.

The southern African nation owes foreign entities, including airlines, and fuel and grain suppliers, about $2.6 billion in legacy debt since it dropped the 1:1 peg of its local dollar to the U.S. unit a year ago, but hasn’t been able to meet payment obligations due to the severe shortage of foreign currency.

Another 350 transactions valued at $457 million will be finalized by Feb. 29, the bank said.

Senior government officials have previously said they would ask creditors to take a cut on some of the debt, to save on the much-needed foreign currency.

Foreign debt of $361 million owed by the bank was not included in the amounts, Governor John Mangudya said.

Politicians continue to bicker while Zimbabweans are starving – The Zimbabwean

Zimbabwe is teetering on the edge of a large-scale humanitarian crisis and South Africa and the Southern African Development Community (SADC) cannot afford to ignore it. Half the population (7.7 million) is at risk of starvation, making this the country’s worst food insecurity in a decade.

Maize meal is disappearing from shop shelves and the country is setting up a maize meal committee to preside over the procurement and distribution of the staple. Establishing committees has been the Zimbabwe government’s strategy when it is left without answers. Too often, such committees and commissions of inquiry merely lead to more opportunities for patronage – for example the Motlanthe Commission.

While Zimbabwe, like most parts of Southern Africa, has experienced recurrent drought in the past three seasons, its crisis goes beyond the vagaries of weather and climate change. A drought doesn’t necessarily translate into food insecurity. Zimbabwe’s crisis is largely due to policy and infrastructure failure. The country has less than a month’s supply of grain in the national reserves. How did Zimbabwe get to this point?

Corruption, policy distortions, inconsistencies and outright elitist and partisan policies have been the bane of the agricultural sector and are indicative of how the country has been managed. Investment in agriculture has been low since the advent of fast-track land reform. Both the current and previous administrations failed to provide security for land tenure or make the guaranteeing of property rights a priority.

Although the number of farmers has risen, grain production has plunged to its lowest in years

The government issued 99-year leases for all land appropriated under fast-track land reform. The lease is neither transferrable nor bankable. The lease can be revoked at will by the state. Recent cases of threats to withdraw 99-year leases to people who have fallen out with the establishment serve only to scare away would-be investors. This has made agricultural land a dead asset.

Chasing away white commercial farmers during land reform has seen an increase in the use of land as a tool for electioneering. While a considerable number of landless peasants benefited from the process, land was also parcelled out as an instrument of patronage.

Almost every senior civil servant, military top brass and ruling party functionary has become a farmer. These ‘cellphone farmers’ (who direct farm operations remotely via cellphones) have access to government inputs including fuel, which they trade instead of using it for farming.

In addition, many taxpayer-funded agriculture support schemes have been churned out, including the infamous command agriculture which saw the treasury part with US$3 billion. The government has failed to account for these schemes.

A month after scrapping maize subsidies, the government was forced to reverse its decision

It was also recently revealed that part of the command agriculture money was used to procure top-of-the-range vehicles for ‘monitoring’ the scheme. Notwithstanding the increase in the number of farmers and the money invested, grain production has plunged, and the country cannot feed itself. Grain production is at its lowest for years.

The government in the past year has issued contradictory policies and public pronouncements in relation to grain. Maize has for decades been subsidised, with grain millers procuring maize for a song at the Grain Marketing Board (GMB). The GMB has the monopoly over grain and by law all farmers must sell their produce to it.

The maize producer price has been capped way below what would make economic sense for a smallholder farmer. At present a ton of maize is pegged at Z$1 400 which would translate to just below US$80. The producer prices and GBM monopoly have become a disincentive for grain farmers. Grain production has become less viable as a business, hence production levels remain supressed, affecting the country’s grain reserves.

During his 2020 budget speech Finance Minister Mthuli Ncube announced the scrapping of maize subsidies among a host of other measures to reduce government’s unsustainable expenditure budget. One month later the government was forced to reverse its decision as maize prices spiked beyond the reach of many.

No one is getting maize at the gazetted price and the commodity has become scarce

The continued subsidies have created an opportunity for arbitrage for a few select companies. The gazetted retail price for a 10kg bag of maize meal in Zimbabwe is currently pegged at Z$70. This is below the market price of Z$90 and less than half of the going price on the black market.

Seven companies have been granted access to government-subsidised grain at less than half the price of importation and market price. Because the system is created to be porous, the same companies with access to subsidised grain allegedly engage in inside marketing and the product finds its way onto the black market. Ultimately no one is getting maize at the gazetted price and the commodity has become scarce.

Zimbabwe has been a victim of successive droughts, but poor policies with anti-market economics, abuse of state resources and corruption have affected the country’s capacity to prepare and stock up reserves for the drought seasons.

In the absence of political conflict and violence, the humanitarian crisis is escaping the radar of regional leaders’ attention. Given the scale of the disaster, South Africa and SADC cannot afford to ignore it. Already millions of Zimbabweans are in South Africa as economic migrants. With the crisis looming there, millions more hungry Zimbabweans are bound to join them.

Since the last South Africa-Zimbabwe Bi-National Commission, South Africa’s government hasn’t been visible regarding the unfolding events in Zimbabwe. President Cyril Ramaphosa’s government should use the 2020 Bi-National Commission to be upfront with Emmerson Mnangagwa’s administration regarding the link between food insecurity and macro-political and economic instability.

As South Africa and regional leaders continue to pamper the Mnangagwa administration instead of nudging it towards reforms, Zimbabwe moves closer to a fully-fledged humanitarian emergency with ripple effects across the region. A collaborative approach is urgently needed as the implications run across SADC.

Ringisai Chikohomero, Researcher, Peace Operations and Peace Building Programme, Pretoria

This article is written as part of a project funded by UK Aid. The views expressed do not necessarily reflect the UK government’s official policies.

Post published in: Featured

Can joint ventures and sub-letting unleash Zimbabwe’s agricultural potential? – The Zimbabwean

Last year, as part of the economic reform agenda, the government has responded by approving measures that allow joint ventures (JVs) and sub-letting with the hope that this will encourage investment, foster skills, increase mechanisation and release finance for improving productivity.

A useful paper by Prosper Matondi of Ruzivo Trust came out recently that discusses the issues. Building on past practices of tenancy arrangements in large-scale commercial farms, ever since land reform, joint ventures with external investors, former white large-scale commercial farmers and others has been on-going, but frequently very much under-the-radar. Former president, Robert Mugabe, was very much against the idea, fearing that such arrangements would reverse the gains of land reform, allowing former farmers back onto the land. Selective agreements were made, notably with Chinese investors in tobacco, but otherwise deals had to be struck informally or at a local level with district approval but without wider publicity.

JVs on state farms: state assets for private gain?

In 2014, with state farms in crisis, the Agricultural Rural Development Authority (ARDA) was encouraged to lease out its land to private investors and broker joint ventures on all parastatal-held land. This now involves 24 farms across the country, all of which are now running as commercial ventures, with a variety of investors, based on 5-20 year partnership arrangements. The transparency of such deals has left much to be desired, however, and state assets have been deployed for private gain, with some particular firms, such as Trek Petroleum (which Trafigura/Sakunda has a stake in), having powerful political backers. This was a hidden land ‘reform’ on a large scale, and while hailed as a route to recapitalisation of state farms can also be seen a source of elite capture.

An earlier blog discussed this move, raising questions as to whether this is the appropriate use of parastatal resources and capacity. New public-private initiatives around strategic investments in sugar for biofuel are proposed for the areas around the new Tugwi Mukose dam in Masvingo province. This follows on from the Chisumbanje deal in the Save valley, involving the notorious ZANU-PF supporter, Billy Rautenbach, whose Green Fuels company took over around 10,000 hectares of ARDA land for a mix of estate and outgrower production of cane in 2009.

Partnership farming in land reform areas: boosting production on A2 farms

Perhaps more interesting than these large-scale state transfers, often to well-connected companies, are the smaller deals that can now unfold with land reform beneficiaries on resettlement land. While the Ruzivo paper notes correctly that the new arrangements open up opportunities for joint ventures or sub-leases on any type of land, this is most likely to happen on A2 land, as A1 smallholder areas are well utilised and often highly productive. It is in the A2 areas where investment has been lacking and there is a dire need for recapitalisation. To date, the lack of financing has been the major constraint to success in most A2 farms without external sources of capital.

Existing JVs show the potentials. In our study areas in Mvurwi, we have been following a number of arrangements, including six involving Chinese investments and several involving local investors. Chinese investors have usually come through the Chinese tobacco contracting company, Tianze, that operates widely in the area, or have made deals with banks who have taken control of properties due to non-payment of loans. They have clear contractual arrangements, usually over 20 years or more, for full management of the farm, including taking overall property, the workforce and so on. A wholly new operation is established, often with significant new investment in irrigation (centre pivots), mechanisation (tractors etc.) and processing facilities (rocket barns).

Very often they are employing consultants and farm managers who have worked in the tobacco industry for years to assist them, as the companies investing are often Chinese provincial companies with diverse portfolios often not involving tobacco. While the financial performance of such operations is of course not known, many comment that the prospect of turning a profit is remote in the initial period, and investors need deep pockets. Chinese company officials working on such farms comment that the business conditions in Zimbabwe are so bad that they wonder if they will survive, and some are diversifying into mining and other operations to spread risk.

Such JVs contrast with those established more informally, often involving a former white farmer or an urban business person going into partnership with an existing A2 land reform farmer. The farmer may still be resident and farm some of the area, in line with their means, while the investor takes over the larger portion of the land. When relationships are good and trust is built up, these seem to work well. They are still few and far between, but the potentials are significant, as many farms have spare land which could easily be sub-let. As noted on this blog before, there is much debate in Zimbabwe about the ‘under-utilisation’ of land, and certainly joint ventures can help reduce this, increasing capacity. However, contrary to the Ruzivo paper, which generally paints a rather dismal picture of post-land reform areas, there is certainly not as much as 60% of land available for use across A1 and A2 resettlement areas.

Another JV mentioned in the paper, but not seen so prominently in the areas we work, is seasonal short-term land sub-letting for a particular crop. Here, land across many farms is let for – say maize – and the company is in charge of inputs, marketing and providing equipment. This returns some of the scale advantages of large-scale farming but distributes risk across multiple producers, much as does contract farming, now familiar in cotton, tobacco and some other commodities. This may have potential for some crops in some places (mostly likely where there are large concentrations of A2 farms), but the management and logistics of operating multiple contracts over many farms is considerable, and current conditions certainly would make this a very difficult business proposition.

Navigating bureaucracy: practical risks of JVs

Perhaps the most interesting part of the paper for me was the discussion of the risk of joint ventures. You can see the economic rationale clearly. One party has an asset (land) and the other has another asset (finance – and/or skill, equipment etc.) and it seems like a win-win. Until you try and get the arrangement formalised that is. A neat diagram in the paper (Figure 2.1, page 7; see below) encapsulates the challenges, and multiple risks, involved in negotiating a joint venture. The complex bureaucracy of land administration, across national and district scales, combined with the multiple legal frameworks (discussed at length in the paper) make the prospect daunting to say the least. No wonder Chinese investors have gone to powerful individuals and negotiated directly, while other arrangements have remained hidden and informal.

If JVs are to be a feature of Zimbabwe’s agricultural landscape, building an administrative system fit for purpose and, through this, building trust that it can work efficiently, and without the risk of sudden reversals and political interference, is vital. The government can go on and on about the importance of ‘unlocking value’ and ‘facilitating investment’, but unless the system is easy to navigate and is transparent and accountable, then many will continue to shy away, and the opportunities to invest in agriculture will remain on paper, but seldom realised in practice.

This post was written by Ian Scoones and first appeared on Zimbabweland

Post published in: Agriculture

Zimbabwe to repatriate anti-colonial heroes’ remains from Britain – The Zimbabwean

The country’s museums and monuments department had been talking to museums in Britain which “have said we can come and collect the heads of the beheaded heroes,” said Gwasira Makoni, who is leading a special committee preparing for the repatriations.

“We expect that in the next two months some of the heads would have been brought home to be properly mourned and given decent burials”.

Among the heads to the brought back home are those of spirit mediums and cult heroes Mbuya Charwe Nehanda and Sekuru Kaguvi who were some of the early anti-colonial activists in the fight to drive back British colonialists.

“When the white colonialists came, they faced resistance from the locals,” said Makoni.

When they conquered the locals, “they beheaded the chiefs, the warriors who had shown bravery and spirit mediums who gave spiritual guidance and took their heads to Britain as a symbol of subjugation,” he said.

Chief Makoni bemoaned the delay in repatriating the remains, coming 40 years after independence from Britain.

Historian Ottoman Magaya formed the Handa Trust named after Nehanda to press for the repatriation of the heads and lobbied the government to approach British authorities.

Colonialists under the aegis of the British South Africa Company entered Zimbabwe from neighbouring South Africa in 1890 in search of gold and other precious minerals.

They faced resistance from locals whom they later defeated and named the country Rhodesia.

Colonial rule ended after a guerrilla war achieved black-majority rule in 1980 and the country was renamed Zimbabwe under the leadership of Robert Mugabe who died in September 2019.

Post published in: Featured

Mnangagwa’s Neoliberal Assault on the Zimbabwean People – The Zimbabwean

Mnangagwa

How much more austerity the Zimbabwean people can endure is another question, following an economic downturn of 6.5% last year and an unemployment rate that is said to stand at 95%. [1] The Zimbabwe Coalition on Debt and Development (ZIMCODD) slams the additional austerity measures that were “implemented in 2019 against the backdrop of deep socio-economic woes,” charging that “they cultivated an enabling environment for inequality to thrive,” while budget cuts have “further relegated ordinary citizens to abject poverty.” [2]

Privatization and Privation

Mnangagwa’s aim is nothing less than the total transformation of the economy, and Minister of Finance and Economic Development Mthuli Ncube has proclaimed, “We will be privatizing the banking assets that we own; we are going to make a lot of progress this year, and we want to make sure that we really create a private sector-led economy in Zimbabwe.” [3]

On October 5, 2018, Mnangagwa’s government published its Transitional Stabilization Program (TSP), which detailed the reform measures that the government planned to implement over the following two years. In the document’s preface, Mnangagwa stated that the policy “will inevitably be driven by the private sector,” which will entail “opening the country to international investors and financiers.” The Civil Service is being repurposed so that it focuses on serving the needs of private capital. Mnangagwa wants the government to create “an enabling environment for state and non-state actors, including the private sector and communities in the delivery of public goods and services, and development.” [4]

The aim of what the TSP terms an “entrepreneurial Civil Service” is to facilitate “the identification and creation of opportunities” for investors looking to establish “service delivery and enterprises.” State and private sector actors will team in producing “the delivery of public goods and services, and development.” [5] Investors taking over privatized public services will undoubtedly be motivated by profit-seeking rather than serving the common good, while the role of government is to provide business with profitable opportunities.

A key goal of the stabilization program is to dismantle much of the public sector. As the document phrases it, the objective is to “scale down” government support for “public entities and local authorities,” in favor of “deepening synergies with the private sector.” [6] As interpreted by privatization-inclined officials, where there can be “efficiency gains, it will be desirable for Government entities and local authorities to move out in favor of private sector service provision.” [7] Since no amount of evidence can persuade the neoliberal mind that there could ever be a case of efficient public service, this amounts to coded language for near-total privatization.

The first phase of privatization is slated to be completed by the end of 2020. By that time, eleven state-owned enterprises should be privatized, along with 23 subsidiaries of the Industrial Development Corporation (IDC) and the Zimbabwe Mining Development Corporation. Additionally, two state-owned firms and three IDC subsidiaries are to be liquidated altogether. [8]

The privatization effort is an ongoing process, and many other public enterprises will undergo performance reviews, which will “recommend to Government on the best options for reforming these.” [9] Initially, more than half of 107 state entities will be “undergoing reform.” [10] While investors can seize the chance to purchase state-owned enterprises at bargain-basement prices, government workers will follow a different economic trajectory, as the program promises that “the salary and benefits freeze imposed on all State Entities…remains in force.” [11] Those enterprises not immediately privatized will have the groundwork laid for their eventual disposal, as the plan calls for the “introduction of more private-sector experts in overseeing management of public enterprises.” [12]

Mnangagwa’s economic policymakers want to pit provinces and localities against each other in lowering costs to compete in attracting investors. “Marketwise,” the policy document states, “each province and Local Authority will transform itself into an investment and economic zone,” in order to make themselves “attractive for both local and foreign investment.” [13] The logic of the approach is that the return for maximizing profitability for investors will be a downward spiral in living standards for ordinary workers, as they are compelled to undercut other areas.

Except for diamonds and platinum, Mnangagwa had already jettisoned Zimbabwe’s Indigenization and Empowerment Act, which had mandated a minimum of 51% local ownership in mining companies. Now he has also eliminated the local ownership provision for diamond and platinum mining operations. [14] As Minister Ncube explains, “We say Zimbabwe is open for business; you can only be open if you allow ownership of 100 percent.” [15] As a further inducement to foreign investors, the royalty rate on diamond mining is being reduced by one third this year. [16]

When a government is more eager to please Western investors than its people, the conventional approach is to seek the advice of the IMF, and Mnangagwa’s government is no different. It asked the IMF to help direct and manage its neoliberal stabilization program through a Staff-Monitored Program (SMP) for the period of May 15, 2019, to March 15, 2020, [17] which presumably may be extended. Not surprisingly, the advice the IMF has to offer adheres to its customary tried-and-failed approach. The IMF says the SMP “is designed to support the authorities’ reform agenda,” which, among other structural measures, includes a “market-based foreign exchange,” and “steps to reform and privatize state-owned enterprises.” [18]

As an inducement to the IMF, Minister Ncube attached a letter in his request to the IMF to establish the SMP, offering two carrots that would be enough to gladden the heart of any public-sector slashing wrecker. He pointed out that Zimbabwe’s budget “will reduce the real wages of public servants,” while state-owned enterprises “have been earmarked for privatization, liquidation, or merger.” As for the agricultural sector, Ncube assured the IMF that “our objective is to reorient the financing model for agriculture to crowd in private-sector financing, reduce significantly government footprint in production, and lessen the dependence on the budget.” [19]

The IMF applauded the government’s 2019 budget cuts that targeted programs that benefit the population at large, including “further fiscal consolidation by containing the wage bill, reducing transfers to SOEs [State Owned Enterprises] and improving the design of agricultural subsidies.” [20] What the IMF meant by its use of the word ‘improving’ was made more explicit when it noted that Zimbabwe’s budget “envisages a gradual phasing out of these subsidies, allowing the private sector to take the lead in driving” what it rather imaginatively termed “sustainable growth in the agricultural sector.” [21]

Despite all these steps, the government’s drive to liberalize the economy has not been fast enough to suit the IMF, as Zimbabwe has missed hitting some IMF-set targets. A meeting will be held in Washington, DC later this month to determine “the way forward.” [22]

A standard aim of neoliberal economic policy is to shift costs from the wealthy onto working people. Following that prescription, Zimbabwe has raised fuel costs until the nation now has the world’s highest-priced gasoline. [23] In a further blow to a population reeling from the impact of hyperinflation caused by Mnangagwa’s misconceived launch of a new currency, the government boosted the average tariff on electricity by 320%. Worse yet, the Zimbabwe Energy Regulatory Authority announced that the tax would be indexed to the U.S. dollar. [24] Given the rapidly declining value of Zimbabwe’s dollar relative to the U.S. dollar, in real terms the increase is far larger for the average person receiving pay in local currency.

Meanwhile, this year’s budget reduces the corporate tax rate to less than 25%. [25] Western corporations investing in Zimbabwe’s Special Economic Zones can enjoy zero tax for the first five years, followed by 15% after that. They are also granted an allowance of 50% of costs in the first year, and 25% for the next two years, as well as an array of other benefits. [26] Contrast that with the tax on individuals. There is a value-added tax rate of 14.5%, which by its nature disproportionally impacts working people. Personal income over US$3,601 is taxed at 25%, topping the corporate rate. Anything earned above US$12,001 is taxed at 30% and so on, in steps reaching to the maximum 40%. [27]

Mnangagwa’s Transitional Stabilization Program is still in its early stages, but already the harm that it has caused is such that one can say it would be more accurate to preface the word stabilization with ‘de-.‘ Or as Minister Ncube rather revealingly put it, “Zimbabwe is easily the biggest buy in Africa right now.” [28] Whether the Zimbabwean people are quite as keen on selling out their country is another matter.

Dismantling Land Reform in Slow Motion

Fast-track land reform in Zimbabwe was an ambitious program that counteracted many of the inequities inherited from the periods of colonial and apartheid rule. The program retains considerable popularity, which has the effect of blocking Mnangagwa from launching a frontal attack against it. However, the program is vulnerable to being chipped away through indirect means.

Historically, reliance on private financing in Zimbabwe has disadvantaged farmers who raise crops for domestic consumption, as banks preferred to support export-oriented operations. Small farm holders have not always had access to the inputs they needed to achieve full productivity. Because private contract farming focused mainly on the export market, the government of Zimbabwe stepped in and established its Command Agriculture program in 2016, as a state-run project to provide much-needed inputs and a ready market for farmers producing crops oriented for domestic consumption.

Command Agriculture prioritized the needs of farmers and the nation over banking and Western interests. As four prominent agricultural specialists concluded in an analysis published by Agrarian South, “Command Agriculture has been a direct challenge to World Bank policy recommendations and Western think tanks, which see no role for the state in agricultural financing and marketing, save for the provision of infrastructural development.” [29]

The success of farming operations is highly dependent on the provision of sufficient and timely inputs. Although Western sanctions hampered the government, it “provided much-needed inputs…albeit in varying quantities and with inadequate supply of inputs and late input distribution.” Nevertheless, this was a decided improvement over the lack of support from private contract farming. Command Agriculture “also provided a ready market for the maize, favorable prices and much-needed extension services,” the Agrarian South report added, based on observation in the Zvimba district. [30]

Because agriculture is a crucial pillar in Zimbabwe’s economy, it is a prime target for neoliberal transformation. Indeed, land issues have been at the forefront of Western hostility. Mnangagwa hungers for Western approval, but he cannot win that until he he demonstrates progress in undoing land reform to a noticeable extent and in liberalizing the agricultural sector.

A joint review by the World Bank and Zimbabwean government officials identifies agriculture as “a top priority” under the Transitional Stabilization Program.[31] Under Mnangagwa’s direction, ‘Command Agriculture’ has been rechristened as ‘Smart Agriculture,’ and financing is being shifted from the government back to the same banks that had consistently proved recalcitrant in engaging with domestically-oriented farming operations.

One will not hear this from Mnangagwa’s officials, but Command Agriculture showed immediate and positive results, and maize production jumped by 321% in the 2016/2017 season. By comparison, production languished for those commercial grain crops that had not been covered by Command Agriculture support. As a result of the support given to farmers, the area planted in maize exceeded that of any time in the previous ten years, and “yields were also high, surpassing the national maize requirements for the first time in many years.” [32]

The World Bank concedes that the government’s “agricultural support, notably the Special Maize Program, did support agricultural production – without such programs, output and thus revenue would have declined, but adds that “it is difficult to disentangle the impact of government support from the effects of the rebound from the drought.”[33] Certainly, improving weather that season was a factor, but given that non-supported grain crops fared far worse during the same planting season points to the efficacy of Command Agriculture.

No matter the results, Command Agriculture had to go. The joint World Bank-Zimbabwe government report complains that “continued pressure from Command Agriculture on public spending…makes restoring macroeconomic stability difficult,” thus making it a prime target for budget-cutting. To no one’s surprise, the report advocates “reforming” the program and “reducing its cost.” [34]

The stabilization program calls for agricultural growth that is “premised on performance of cash crops such as tobacco, cotton, sugar cane and soya beans” aimed at the export market. [35] This goal dovetails with the program’s call for “greater involvement of the domestic financial system in underpinning financing of agriculture.” [36] Under Mnangagwa, the government’s role will be withdrawn while “private sector support gathers[s] momentum.” [37]

Tradable new leases are replacing Zimbabwe’s system of 99-year land leases. [38] That systemic change is in line with the recommendation of the World Bank-Zimbabwe report, which asserts, “Zimbabwe should aspire to a well-functioning commercial agriculture sector that should be able to finance most of its working capital and capital expenditure needs through lines of credit with banks.” [39]

According to Minister of Lands, Agriculture, Water, and Rural Resettlement Perrance Shiri, “Previously we used not to allow joint ventures but we have relaxed the law and our people are now free to borrow using land.” [40] People will also be free to lose land, now that it is to be used as collateral in commercial loans or subjected to unequal economic relationships in joint ventures. The inevitable outcome of this policy change will be to consolidate land into fewer and more economically advantaged hands.

In an assessment by ZIMCODD, the shift to “commercialization of agriculture through shrinking of agricultural subsidies” is a “purely neo-liberal ideology” that will disadvantage small farm holders. “Giving room for private sector support is a way of privatizing the agricultural sector, a move that threatens food security for the nation.” [41] The baleful impact on the agricultural sector is a factor that Shiri elides in his celebration of the commercialization of land.

The Sam Moyo African Institute for Agrarian Studies warns that “contract farming and joint ventures spearheaded by private capital” have the “potential of undermining the peasantry base through land alienation, in some cases, labor exploitation, and unequal exchange of surplus value which occurs through input and output markets.” There is historical precedent, and the institute points to the example of Mozambique, where “a majority of peasants lost their land when they entered into asymmetrical relationships with domestic and foreign agrarian capital in sugar cane farming.” [42]

For peasants, “property loss through market effects happens through mechanisms of distress sales, economic recession, bad harvest, illness or death in the family, or calamity, and through mortgage default.” Markets provide an unequal playing surface, favoring “strong market actors, that is, those with the capital, know-how, and information to protect and expand their property rights, and to buffer themselves against risk.” Over time, more and more land is transferred to “capital-rich actors.” [43]

Zimbabwe’s agricultural sector must cope with two serious challenges. Western sanctions remain in place, aimed at depriving the nation of access to financial resources. Worse yet, the Southern Africa region is expected to be among the hardest hit by climate change. Nothing can alter the fact that the extent and quality of arable land in Zimbabwe will steadily decline in the years ahead.

Already, drought has struck Zimbabwe for two years running, and the current one is the worst in nearly forty years. Grain reserves are nearly depleted, and the World Food Program classifies half of Zimbabwe’s population as “food insecure.”

Neither of those is the key issue, according to the Transitional Stabilization Program, which blames the decrease in agricultural productivity on “declining investment, and lack of know-how, among others.” The solution, as Mnangagwa’s government sees, lies in “embracing former displaced white farmers to form joint venture partnerships with the beneficiary A1 [small-scale] and A2 [medium- and large-scale] farmers.” Acting as “anchor farmers to other beneficiaries,” white farmers will, it is claimed, “ensure increased production on the farms.” [44] Never mind the parlous impact of sanctions or climate change; according to the TSP, bringing back wealthy white farmers will turn around production.

And where are these anchor farms to be formed? Minister Perrance Shiri says, “The time will come when the government may really consider taking back all underutilized land and allocate it to other potential users.” [45] Mnangagwa is already defining “underutilized” in a politically expedient way, targeting individuals who had opposed his scheming and were therefore forced to flee the country after the military coup, even though some of their farms continue to be fully operational. [46]

It does not require much imagination to anticipate how ‘anchor farms’ may be established. First, specific tracts of land are identified. Then excuses will be sought to define that land as ‘underutilized.’ Small farm holders dealing with the impact of drought or facing temporary economic challenges may have their land handed over to returning wealthy white farmers.

Astonishingly, the Transitional Stabilization Program argues that “the New Dispensation will also tap into the vast agricultural knowledge, skills, experience, and farming competencies that are inherent in the operations of most of those former farmers who lost farms and are currently without access to land,” thereby “ensuring the revival of the agricultural sector.” [47]

Note the usage of the word ‘inherent’ in the above quotation. Such language embraces the insulting and misleading Western narrative that white large farm owners are uniquely knowledgeable, capable, and efficient, while black farmers inherently lack ability. This concept is problematic on so many levels. For one thing, it confuses wealth and privilege with ability. It also discounts the disparity in wealth imposed by colonialism and apartheid.

Two decades have passed since fast-track land reform. Surely resettled black farmers have learned a thing or two in all that time! Moreover, many of them had previously managed farms in the arid communal areas, so their experience extends even further back. Reestablishing extreme economic disparity in the agricultural sector is not a solution to productivity. Nor do black farmers need wealthy white farmers to “advise” them on what they already know from long experience. Basing agricultural policy on demeaning mythology can only have a damaging effect.

What is needed is to provide farmers with the support they need to do the job they are quite capable of doing. That is precisely what Command Agriculture is designed to do. Field studies by experts such as Sam Moyo, Ian Scoones, and others have shown how productive resettled farmers have been when supplied with adequate inputs, and in many cases, even when not.

Command Agriculture should be expanded to enhance reliability and timeliness in the provision of inputs. An ambitious government-supported program to broaden water access and extend irrigation infrastructure would help to counteract the effects of climate change. None of that fits with the free-market mentality. Instead, Mnangagwa is eliminating Command Agriculture and commercializing production.

Mnangagwa’s vision, as he puts it, is that “critically…we must be a destination where capital feels safe to come, and to do so we had to introduce various economic measures to attract global capital into our jurisdiction.” [48] If only he had a care for the economic safety of the Zimbabwean people.

Western leaders demand nothing less than total subjugation, and while Mnangagwa has made significant strides in that direction, more is expected from him. Western capital is waiting for further concessions. Responding to such concerns, Mnangagwa assured Western diplomats that he would “accelerate” neoliberal reforms. In what can only portend more hardship for the Zimbabwean people, he added that this year, “elaborate plans will be implemented to achieve our key objectives.” [49]

The main opposition party, the Movement for Democratic Change, offers no alternative, as Mnangagwa has mostly adopted its neoliberal program. At any rate, it may be difficult to dislodge ‘president’ Emmerson Mnangagwa and ‘vice president’ Constantino Chiwenga, the former general who led the military coup that brought them both to power. One doesn’t seize political power through military violence, only to willingly relinquish it.

Sadly, as long as Zimbabwe remains in the hands of self-serving usurpers, the nation can only look forward to a protracted period of economic dislocation.

Notes.

1. Victor Bhoroma, “Zim Economy Re-dollarising Rapidly,” Zimbabwe Independent, January 31, 2020. 

2. Tafadzwa Mhlanga, “ZINCODD Bemoans Inequality in Zim,” The Standard, January 26, 2020. 

3. Tendai Matunhu, “Government to Create a Private Sector Led Economy,” Harare Post, January 23, 2020. 

4. “Transitional Stabilisation Programme: Reforms Agenda,” preface, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

5. “Transitional Stabilisation Programme: Reforms Agenda,” section 362, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

6. “Transitional Stabilisation Programme: Reforms Agenda,” sections 380-381, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

7. “Transitional Stabilisation Programme: Reforms Agenda,” section 382, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

8. “Transitional Stabilisation Programme: Reforms Agenda,” section 387, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

9. “Transitional Stabilisation Programme: Reforms Agenda,” sections 389-393, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

10. “Transitional Stabilisation Programme: Reforms Agenda,” section 413, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

11. “Transitional Stabilisation Programme: Reforms Agenda,” section 427, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

12. “Transitional Stabilisation Programme: Reforms Agenda,” section 432, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

13. “Transitional Stabilisation Programme: Reforms Agenda,” sections 499-500, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

14. Fazila Mohamed, “Zimbabwe Repeals Diamond and Platinum Laws,” 7D News, September 9, 2019. 

15. Felix Njini, Godfrey Marawanyika, Antony Sguazzin, “Zimbabwe to Scrap Platinum and Diamond Mine Ownership Rules,” Bloomberg, March 6, 2019. 

16. “Zimbabwe to Reduce Royalty on Mined Diamonds to 10% from 15%,” The Diamond Loupe, November 18, 2019. 

17. Letter of Intent, from Minister of Finance and Economic Development Mthuli Ncube and Governor of the Reserve Bank of Zimbabwe John P. Mangudya to IMF Managing Director Christine Lagarde, May 13, 2019. 

18. Press Release No. 19/189, “IMF Managing Director Approves a Staff-Monitored Program for Zimbabwe,” International Monetary Fund, May 31, 2019. 

19. Letter of Intent: Attachment 1 – Memorandum of Economic and Financial Policies,” May 13, 2019. 

20. Zimbabwe Staff-Monitored Program: Executive Summary,” International Monetary Fund, May 21, 2019. 

21. Zimbabwe Staff-Monitored Program: Executive Summary,” International Monetary Fund, May 21, 2019. 

22. Kudzai Kuwaza and Bridget Mananavire, “Zim Eyes Rescue from IMF Crunch Meeting,” Zimbabwe Independent, January 24, 2020. 

23. Max Bearak, “Zimbabwe’s President Raised Fuel Prices Above $12 a Gallon and Then Jetted Off to Russia. Deadly Chaos Ensued,” Washington Post, January 15, 2019.“Zimbabwe Hikes Fuel Prices 12% in Another Blow to Inflation-weary Consumers,” Reuters, October 29, 2019. 

24. MacDonald Dzirutwe, “Zimbabwe Quadruples Prices, Pummelling Impoverished Consumers,” Reuters, October 9, 2019. 

25. http://taxsummaries.pwc.com/ID/Zimbabwe-Corporate-Taxes-on-corporate-income 

26. Oliver Kazunga, “4 Parastatals to be Listed on ZSE,” Chronicle, October 15, 2019. 

27. https://www.bdo.global/en-gb/microsites/tax-newsletters/world-wide-tax-news/issue-53-december-2019/zimbabwe-2020-budget 

28. CNN Quest Means Business program, December 5, 2018. 

29. Freedom Mazwi, Abel Chemura, George T. Mudimu, Walter Chambati, “Political Economy of Command Agriculture in Zimbabwe: A State-led Contract Farming Model,” Agrarian South: Journal of Political Economy, 8(1–2), 232–257. 

30. Freedom Mazwi, Abel Chemura, George T. Mudimu, Walter Chambati, “Political Economy of Command Agriculture in Zimbabwe: A State-led Contract Farming Model,” Agrarian South: Journal of Political Economy, 8(1–2), 232–257. 

31. “Zimbabwe Public Expenditure Review with a Focus on Agriculture,” p vii, World Bank, 2019. 

32. Freedom Mazwi, Abel Chemura, George T. Mudimu, Walter Chambati, “Political Economy of Command Agriculture in Zimbabwe: A State-led Contract Farming Model,” Agrarian South: Journal of Political Economy, 8(1–2), 232–257. 

33. “Zimbabwe Public Expenditure Review with a Focus on Agriculture,” p 43, World Bank, 2019. 

34. “Zimbabwe Public Expenditure Review with a Focus on Agriculture,” p 46, World Bank, 2019. 

35. “Transitional Stabilisation Programme: Reforms Agenda,” section 696, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

36. “Transitional Stabilisation Programme: Reforms Agenda,” section 703, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

37. “Transitional Stabilisation Programme: Reforms Agenda,” section 710, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

38.  “Transitional Stabilisation Programme: Reforms Agenda,” sections 712-716, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

39. “Zimbabwe Public Expenditure Review with a Focus on Agriculture,” p 50, World Bank, 2019. 

40. Michael Tome and Leroy Mphambela, “Govt to Repossess Underutilised Farms,” The Herald, February 7, 2020. 

41. “Transitional Stabilisation Programme, October 2018 to December 2020: Summary and Analysis from a Socioeconomic Justice Perspective,” Zimbabwe Coalition on Debt & Development, November 7, 2018. 

42. Freedom Mazwi, Newman Tekwa, Walter Chambati, George T. Mudimu, “Locating the Position of Peasants Under the ‘New Dispensation’: A Focus on Land Tenure Issues,” Sam Moyo African Institute for Agrarian Studies, Policy Brief Issue: 03/2018. 

43. Freedom Mazwi, Newman Tekwa, Walter Chambati, George T. Mudimu, “Locating the Position of Peasants Under the ‘New Dispensation’: A Focus on Land Tenure Issues,” Sam Moyo African Institute for Agrarian Studies, Policy Brief Issue: 03/2018. 

44. “Transitional Stabilisation Programme: Reforms Agenda,” sections 973 and 975, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

45. Michael Tome and Leroy Mphambela, “Govt to Repossess Underutilised Farms,” The Herald, February 7, 2020. 

46. Everson Mushava, “Mnangagwa Goes for Broke,” The Standard, January 26, 2020. 

47. “Transitional Stabilisation Programme: Reforms Agenda,” sections 979 and 980, Zimbabwe Ministry of Finance and Economic Development, October 5, 2018 

48. “We Must Be a Destination Where Capital Feels Safe,” Sunday Mail, June 23, 2019. 

49. Fairai Machivenyika, “Zim to Speed Up Reforms: ED,” The Herald, February 7, 2020. 

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