Wednesday, June 09, 2004

Zimbabwe: nationalizing farmland

Zimbabwe's government plans to nationalise farmland by cancelling the titles to all productive land and replacing them with 99-year leases, a senior cabinet minister was quoted as saying on Tuesday.

"In the end all land shall be state land and there will be no such thing called private land," Lands Minister John Nkomo told the state-owned Herald.

[...] Fewer than 500 white farmers now remain in Zimbabwe and own just three percent of the country's land, according to a government audit of the land reform programme. (full-text)
Here is stating the obvious ... this latest announcement affects all landowners, both white and black.

According to the original Zim Herald story, Nkomo "...advised all land owners to come forward for vetting in order to qualify for the 99-year lease agreement." (Other reports characterise Nkomo's statment as an order to landowners to immediately give up their titles ... and other reports leave it more ambiguous, saying the start of the nationalization process is unknown). Nkomo also said that a national land board would be set up to supervise the process and ensure the effective use of land.

The opposition is less than thrilled by this latest announcement.
David Coltart, the MDC legal spokesman, said: [...]"This is not Zambia or Mozambique, which had leasehold as a system. Zimbabweans have had title deeds for over 100 years."
The idea that leases are used in other African countries was brought up in the original Zim Herald article.
"This practice [leasing land] is common throughout the rest of Africa and the only few countries not practising it include Zimbabwe and South Africa. Even in Zambia former commercial farmers from Zimbabwe who resettled there are operating under this system," said a senior valuer with one of the leading real estate firms.

"The only problem that it can present is that it is difficult for a person holding a lease agreement to make permanent improvements on the property," he added.

A leading banker also pointed out that since the land would be leased using the "in perpetuity" system, accessing funds from commercial banks would not present a problem.

"It depends on how the lease agreement between the farmer and Government is drawn up and whether banks would accept it as collateral," he said. (full-text)
More from the Voice of America ...
Central bank governor Gideon Gono, speaking from the United States, said, as a banker, he was pleased the plan offered a clear, decisive way forward. He said commercial banks would view leases as bankable assets, which would be used as security against loans. (full-text)
Others are not so sure. From The Independent ...
"Effectively, this [announcement] means it is no longer possible for any person to use land or any building on that land - be it a house or factory - as collateral to borrow money from banks as it is classified as state land," said a government economist on condition of anonymity.

"There is no better and quicker way of destroying an economy. I frankly don't know who advised them on this unacceptable step." [Zimbabwean economist John] Robertson said the move would in effect stop any new foreign investment in Zimbabwe. It would also freeze all economic growth as nobody would have collateral to borrow money and develop their business. (full-text)
The Financial Times quotes unnamed lawyers as saying that the government will have to amend the country's constitution before it can go ahead with this plan ... but the paper also reports that even opposition leaders believe this will not be a serious obstacle for the government.

Cathy Buckle, writing in the Independent, says that news of Nkomo's statment was not mentioned on either the 5 or 6pm news bulletins on state-owned radio in Zimbabwe. She goes on to say:
As a dispossessed commercial farmer in Zimbabwe I view the announcement by Minister Nkomo with a healthy dose of scepticism. For the past 52 months the statements, announcements and pronouncements about farmland have changed almost every month. What began as the acquisition of one million hectares of land soon became five million and then 11 million.

Almost every minister here has made some sort of a statement about Zimbabwe's farmland but 52 months later it has become abundantly clear that it is only when the announcement is made by President Mugabe himself that it carries any weight.

[...]One cannot help but wonder how many of the people that have been allocated plots on seized commercial farms will meet the criteria and be able to get 99-year leases. One of the reasons farm production has been so low, has been the lack of title deeds since the farms were redistributed. Without title deeds farmers have had no collateral to secure bank loans, no capital to use to put crops in and cope with inflation at 505 per cent.
The government had said land seizures had been completed last year but it has taken a further 259 mostly white-owned farms since January and has given notice to 918 more.

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The announcement also affects private game reserves ... with the leases on limited to just 25 years.
Eddie Cross, finance spokesperson for the opposition Movement for Democratic Change, told the Cape Times by email "this will mark the end of private conservation in Zimbabwe".

"The majority of the conservancies are foreign-owned and therefore protected by investment guarantee agreements with foreign governments. French, German, American and British interests are involved, as are several South African investors. These people have bought into these conservancies with certificates of 'no interest' by the state (and have) made huge investments in infrastructure and in wildlife."

At stake were hunting and ecotourism revenues of around $50-million (about R300-million) a year, investment inflows of around $6-million (about R36-milion) a year and the "survival of certain species that have virtually been wiped out in other areas".

[...] Of a long list of farms gazetted since April, most are in mainly game conservancy areas. (full-text)
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John Nkomo's full title -- Minister of Special Affairs in the Office of the President and Cabinet in charge of Lands, Land Reform and Resettlement.