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Command agriculture: a Zim disaster in the making

Aug 30 2016 12:40
Malcom Sharara

Harare - I haven't written an opinion article on Zimbabwe for quite a while now. Not because nothing is happening in the southern African nation, but because whatever is happening is more of the same.

Zimbabweans are still struggling and politicians, particularly those in the ruling party, are still clueless on how to solve the country’s problems. Those who have tried to offer solutions are focusing on addressing the symptoms and not the root of the problems.

In my last article back in June, I used the words from Bruce Hornsby’s blockbuster song The Way It Is to register my displeasure at how the country’s authorities are handling the country’s economic and social challenges.

I used the lyrics “hey, old man, how can you stand to think that way? And did you really think about it before you made the rules?”.

READ: Zimbabweans are the authors of their own misfortune

I thought of these words once again following the Zimbabwean government's announcement, through Vice-President Emmerson Mnangagwa, that it is set to introduce command agriculture with a $500m budget having been put in place.

It is astonishing that the country, without forethought, debate or pause, is set to introduce command agriculture. There is obviously not going to be a meeting of minds or a mutuality of interest, but all companies that have something to do with agricultural inputs as well as those with a few dollars in their accounts will, by edict, be required to participate in the latest government programme.

The scheme is targeting 2 000 farmers who are expected to grow 2 million tonnes of maize on 400 000 hectares. Each participating farmer will be required to commit 5 tonnes per hectare towards repayment of advanced loans in the form of irrigation equipment, inputs and chemicals, mechanised equipment, electricity and water charges.

The programme has however drawn mixed feelings from different quarters. Opposition politicians have called it shameful, with former finance minister Tendai Biti lashing out at the Zanu PF government saying it is “incapable of thinking”.

But why are people so quick to criticise the programme before it has seen the light of day?

Once bitten, twice shy, they say. It is not as though object lessons are wanting, as this is not the first time the Zanu PF government has introduced something like this. In 2004 the Reserve Bank of Zimbabwe (RBZ) introduced the Productive Sector Facility for Agriculture. The following year another programme, known as the Agriculture Sector Productivity Enhancement Facility, was introduced to help finance food production. It was followed by the Farm Mechanisation Programmes, which saw farming equipment being distributed to farmers.

While the RBZ said the facilities were meant to help finance food production as well as rebuild the national herd,  the results were disastrous.

Feeding trough for greedy politicians

Instead of the schemes benefiting genuine farmers, they provided greedy politicians with a feeding trough. The equipment and inputs were distributed not only on partisan grounds, but also on patronage basis. Undeserving politicians and their relatives were the major beneficiaries, who never took the inputs for their intended use but ended up selling the fuel that was provided to run generators. Some of the farming equipment was left to gather rust and dust, never to be used again.

To this day, the unnamed beneficiaries of those programmes have not paid anything back, and are looking with glee for another chance to loot.

As much as seed and fertiliser houses are saying they have sufficient stock for the coming agricultural season, dealing with a broke government will leave them with a debt overhang as they try to fund production. At best government can only give them treasury bills, an instrument that has already flooded the local market, running into billions of dollars.

Intermediaries, such as banks among other financial institutions, are already making a killing, taking advantage of desperate individuals and companies wanting to dispose of their treasury bills at heavily discounted values.

Pension funds are also at the mercy of government, amid reports that the latter has already appealed to the Zimbabwe Association of Pension Funds (ZAPF) to assist in raising $348m required to finance the programme. According to the state-owned newspaper, The Herald, government has already advised the ZAPF that government bonds with prescribed asset status are going to be available in the market soon and members are expected to participate.

Unfortunately, the law is already on government’s side as it says pension funds must comply with the prescribed asset ratio of 10% of the fund portfolio. But knowing the history of how people treat government assisted programmes, it will take much effort and discipline for beneficiaries to pay back what they owe. Beneficiaries of RBZ-assisted programmes mentioned earlier have since been protected from paying back the money, or from being named and shamed.

Pensioners' payouts could go up in smoke

History has it that command agriculture is a tried and failed system. There is thus the risk that if pension funds are forced to fund this programme, it will be the last time they see their money. There is also the chance that pension funds, if forced to fund the programme, will end up failing to make payouts to deserving pensioners.

Already most pensioners are living as paupers, because their savings were wiped out during the hyperinflation era. Ironically, one of the reasons the country ended up in record inflation levels numbering into millions was the printing of money to fund agricultural programmes such as the Agriculture Sector Productivity Enhancement Facility and Farm Mechanisation Programmes.

Fears that the programme will be abused are however not unfounded. Precedents have already been set with some of the agricultural equipment meant to benefit farmers - acquired from Brazil under the $98m loan facility - having being handed out at political rallies. Last year, opposition MPs had to approach parliament in an effort to stop Grace Mugabe, the Zanu PF Women’s League leader, from making partisan donations of the equipment at Zanu PF rallies.

Early this year there were reports from Goromonzi and Gwanda that farming equipment donated by the First Lady had not reached the intended beneficiaries. Others said government officials had reneged on helping farmers install some of the donated irrigation equipment, and the equipment was left to gather dust and rust.

* Malcom Sharara is Fin24’s correspondent in Zimbabwe. Views expressed are his own.   

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malcom sharara  |  zimbabwe  |  africa economy  |  opinion  |  farms
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