As we write this letter, many Zimbabweans are recovering from a long night celebrating the resignation of their one-time liberation hero and longtime leader, Robert Mugabe. His ally-turned-rival and former vice-president, Emmerson Mnangagwa, is set to be sworn in as president on Friday.
After 37 years of brutal rule and economic mismanagement, frontier market investors also seem to be welcoming the change. “The transition from Mugabe to Mnangagwa could mark a major and positive shift and put Zimbabwe back on the foreign investor radar,” Hasnain Malik, head of equity research at Equitix Capital, said this morning.
Few sectors seem better placed to benefit more from better stewardship than agriculture. In the decade that followed its independence from Britain in 1980, Zimbabwe’s government went on to implement the Lancaster House Agreement, which called for the peaceful redistribution of farmland from white to black people via voluntary, market-based transactions. About 2.5 million hectares peacefully changed hands. Small-scale owners were supported via government subsidies; larger producers channeled their products via marketing boards. Up to the early 1990s, a lot seemed to work.
“This was the shining decade of Zimbabwean agriculture,” Tinashe Kapuya, an agribusiness trade specialist with the USAID Southern African Trade and Investment Hub, told Agri Investor. The country was exporting vast amounts maize to its neighbors, earning it the nickname of “bread basket” of southern Africa.
Over the following decades, things rapidly went south. Government support became financially hard to sustain, and multilaterals demanded liberalization and structural adjustment policies in return for their help. Marketing boards were privatized, carefully in some cases, but less successfully in others – with new owners reneging to cater for marginalized areas of agriculture that public authorities used to cover. And when the Lancaster House Agreement expired, the government moved on to a system of compulsory land acquisitions, compensated at market prices.
That did not please the UK, which used to finance half the cost of transactions, provided they were made on a willing basis. After the government of Tony Blair ended the deal, Zimbabwe responded by embarking on a “fast-track” redistribution campaign, expropriating commercial-scale facilities owned by white farmers without compensation. With property rights trampled on, capital flight accelerated. “Effectively, all land became state land,” says Kapuya. “It became a dead asset.”
Some hope that Mnangagwa will upend this system, helping to restore Zimbabwe’s agriculture to its former grandeur. A businessman himself, he is said to be somewhat favorable to economic reforms, investor-friendlier policies and greater engagement with international powers. With hardline factions within the ruling Zanu-PF party now seemingly marginalized, constitutional arrangements commanding “fast track” may be up for revision. He may also be inclined to revise or withdraw “indigenization” policies, which forbid foreigners from owning a majority share in domestic businesses.
But there is no guarantee Mugabe’s right-hand man can reinvent himself as a reformer. Mnangagwa, who has a more than questionable human-rights record, was one of the proponents of the controversial Command Agriculture policy put in place at the start of 2016, which some dismiss as “dirigiste” and benefitting connected elites. “There’s a bit of contradiction in what we have come to learn about him,” says Kapuya.
And halting expropriations will not solve all of the sector’s problems. The transfer of commercial-scale facilities to the hands of smallholder farmers – unskilled to run them – is often cited as the main reason behind Zim’s ag collapse. But observers also point to the dearth of financing faced by many growers, who receive little support from the government and can’t borrow much because they lack collateral (an issue worsened by the lack of property rights). The country’s soil fertility varies widely, and some crops are being grown in the wrong places; about half of the land irrigated in 2000 was being irrigated in 2013. Reviving Zimbabwe’s agriculture, if indeed that is the new leader’s intent, will take more than the stroke of a pen.
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