Most of Zimbabwe’s economic challenges, including its budget deficit, trade deficit and crippling foreign currency shortages, can be traced back to how the country handled land reform, a leading economist has said.
Most of Zimbabwe’s economic challenges, including a ballooning budget deficit, a huge trade deficit and crippling foreign currency shortages, can be traced back to how the southern African country handled land reform, a leading economist has said.
Zimbabwe embarked on a land reform programme in 2000, but came under fire for the manner in which it was conducted.
The country was a self-sufficient food producer prior to its land reform programme, but now imports many of its goods.
Of the total imports for the six months to June 2018, crude soya bean oil accounted for $64.6m, rice for $62.2m, durum wheat for $49.3m, and maize for $42.2m.
The drop in productivity at farms has meant the government has sought credit for funding imports, as well as funding farmers who can’t borrow from banks as they lack collateral. This, in turn, has contributed to the country’s budget deficit.
Policies ‘didn’t respect property rights’
Speaking at a conference organised by The Institute of Chartered Accountants of Zimbabwe, themed Economic Trajectory Post-Election, economist John Robertson said the biggest problem with land reform was the nationalisation of land under the state.
“The country’s productive capacity was affected by the land reform policies, which did not respect property rights. Taking the land back was not entirely a bad idea; however, government had no need to take the land off the market.
“By destroying the collateral value of a vitally important national asset, government removed billions of dollars’ worth of collateral value from Zimbabwe’s economy,” said Robertson. “This inflicted enormous harm on the foundations upon which a large part of Zimbabwe’s productive sector had been built.”
Robertson is on record saying what attracted a wide range of manufacturing investors into Zimbabwe was that successful farmers could be relied upon to sustain steady deliveries of raw materials and export revenues.
But when agricultural land was disabled by government’s decision to cancel its collateral value, the flows of previously dependable raw materials slowed or stopped.
Robertson believes restoring property rights and private land ownership is the motivational force that is lacking for Zimbabwe to solve the bulk of its problems.