Funding Zimbabwe’s economic revival – Vince Musewe

via Politicsweb – Funding Zimbabwe`s economic revival by Vince Musewe 14 March 2014

History should only serve to remind us where we have come from but should never limit what we can become.

I notice that I could have left some of my judicious readers on the lurch last week with my suggestions with regard to funding agriculture revival and therefore economic revival through the issue of internationally backed long term bonds. Let me therefore take this opportunity to further explain how this could work and what the likely economic impact could be.

Please note that this is “a view” and there could be other solutions out there, but we must at least start the conversation. Let me also hasten to say that the ideas herein are as a result of the conversations I continue to have with other progressive Zimbabweans and are therefore not mine alone.

Zimbabwe needs patient and friendly long term investment capital. That is not going to happen in the medium term if our political situation remains as it is and potential investors continue to load their decisions with country risk. However, notwithstanding, we can lift ourselves by the boot straps by realising that we have an incredible asset that has very little value because no one has title to it; that asset is our vast arable and fertile land that lies hugely underutilised,  mostly misused or tragically unused; courtesy of ZANU(PF)’s fast track land resettlement fiasco. We cannot sustain this situation any longer.

The overall strategy for accelerating agrarian transformation as the foundation for sustainable economic development in Zimbabwe requires that we deal with; land conflict dispute resolution; land valuation and compensation; a land audit; security of land tenure on  all rural properties;  best practice land administration;  optimum land use planning and productivity; and an up to date land survey and registration exercise.

All these are critical and must be addressed as matter of urgency. My article last week dealt with the issue of how to raise funding for compensation. I will not delve into the other related matters here, simply because there are experts out there who are more qualified to deal with the subject matter.

The Government of Zimbabwe has in principle accepted its responsibility to compensate land owners, subject to an agreement with the farmers on a compensation framework and the securing the required resources.

Such framework must take into account the compensation for land and improvements, including the consideration of such issues as land valuation methodologies and mechanisms, land price information, the basis of levels of compensation to be paid for land and associated property acquired, interest payable and possible institutional responsibilities. Once these are resolved, compensation can then be agreed upon and paid.

The revival of the agriculture sector can be achieved by mobilising funds for compensation from the international community through a compensation model which; removes the conflict over land rights; monetises lost value inherent in the land and other assets; ensures that the compensation is affordable; gives new farmers real bankable security of tenure; and establishes a market for land and other rural assets.

The caveat here is that this does not reverse current land ownership profiles after the fast track land resettlement program, nor is it a backdoor for white commercial farmers to get back into the sector. Once paid off, white farmers would fall under a new land dispensation as everyone else.

Compensation for land is clearly an opportunity for Zimbabwe to hit two or more birds with one stone namely; to remove conflict over land and also attract long term investment capital into the country. Financing the cost of compensation would be achieved through the issue of bonds underwritten by credible international agencies. These bonds would carry a term of say 25 years, and an interest rate that would be related to international market rates at the time they are issued. They would be funded by international financiers specialising in such long term paper. They would be negotiable only in Zimbabwe and denominated in US dollars thus “locking in” huge amounts of capital in the country.

Now bonds are easy to understand, they are essentially a promise to pay the holder so much over a given period of time at a certain interest rate. The best route would be for them to be guaranteed by credible international financial institutions . This will create confidence in the bond as a negotiable instrument where the promise to pay would be met even if the issuer defaults. It improves their quality, tradability and perceived value.

The recipients of the bonds will then have three options; redeem the bond at a discounted value; receive interest over the life of the bond; or borrow against the bond for investment purposes. If we assume that the value of the assets involved is around US$ 7-10 billion, this will mean that when these funds are released into the economy, they will trigger significant macro-economic growth recovery and we would see; an increase in liquidity in the banking sector; the re-establishment of  an active market for land in rural areas with commensurate increase in bank lending to agriculture; an increase in local private investment capital; strengthening of property rights in the wider economy; funding for infrastructure and utilities development; a multiplier effect leading industrial recovery; and new employment creation. As I noted last week, these are the core objectives of Zimasset anyway.

Above all, will be the positive impact on the economy due to the confidence that can be created. This will lead to an increased inflow of foreign investment capital in the all other sectors of the economy; this is what Zimbabwe needs. We can therefore restore normal relations with the international community and reduce the country risk significantly.

In my opinion, the President Mugabe should cease the day and put the country back on track. By doing this, he can maybe leave office with a legacy that says he was not a perfect man, he made some serious and costly mistakes but at least he corrected them to the benefit of all Zimbabweans.

The people of Zimbabwe surely deserve that and after all, the people come first!

Vince Musewe is an economist and author based in Harare. You may contact him on



  • comment-avatar
    Canuck 9 years ago


    I have been involved in finance ( Merrill Lunch et al ) at senior levels in the hated West ever since leaving the Old Rhodesia (in 1965) and ending up in Canada.( yes, you and I have had one-on-one emails in the past )
    What you propose herein would need the settlement of land claims as a prerequisite and so that has to be item #1……one cannot borrow against the security of something to which does not have clear title….
    Item #2 would be that Zim has absolutely zero hope of borrowing any funds at all by way of a bond ( debenture, not to be confused with the African term “bond”….a mortgage so called in the West )unless it is guaranteed by a globally credible agency, and this is what you propose herein…..
    What agency (World Bank, IMF,or similar ) is going to step forward and do this while this government is in power ????
    They have shown themselves to be nothing more than corrupt thieves and until the lot of them are swept out of power I cannot see any hope of credible guarantee agencies volunteering, especially given the attitude of the Gvt. to the Western countries…….and “looking East” and getting the Chinese to do it would be even more difficult !!!!!……they would drive a much harder bargain, to say nothing of the possible investors lack of trust in their “guarantee”.

    Not a bad idea Vince, but a long slog to get to that stage, with many many hurdles that I am afraid this Zim Gvt. would never embrace.

    No, any new initiative to attract foreign funds, either by way of “bonds” or investment MUST start with a new Gvt. and new policies…..away with the Indigenisation laws ( as presently written ),a HUGE attack on corruption ( $570,000 a month???!!!!!…..this is craziness ), and on and on……in other words a return to sanity in the country, something that is lacking today and has been for years.

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    Roving Ambassador 9 years ago

    Whilst I agree with that the major economic driver should be agriculture, I differ on the financing for the compasensation. I believe the opportunity is being lost through the continued plunder and pillaging going on. These resource could have been used to finance our urgent requirements including infrastructure development ( electricity and water).
    But most important, an agrarian reform is needed. The identification of able and qualified farmers, coloured, black or white must be done. They should be able to by this land thus adding into the compensation coffers. Title deeds will then be issued .Cooperation will also bid for land because of their capability to raise funds. Farmers should be given a time limit to prove they can farm. No multiple ownership on the initial issue. They process would eventually self correct.
    Training of future farmers must be embarked on. I have visited Gwebi, was not impressed at all. Training of vets. Training of marine biologist. The list is long.
    But with mad people in charge ,no one listens.
    First, we need a GRAND COALITION to dislodge the pillagers,and also to neutralize the zanufied MDC then we can move forward.
    Patriotism should be the cornerstone.
    Corruption should be destroyed wherever it pops up.

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      Good stuff Vince and R/Ambassador hits the nail right on the head as do others o this blog. So now lets get to work. Where do we start

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    Blackhammer! 9 years ago

    At the time of writing there is a passenger plane which has been lost since last Sunday. Incredible that such a beast can just disappear from the face of the earth. One theory is cabin pressure was lost and everyone on board including the pilots lost consciousness and the plane just drifted off over the high seas. If traffic controllers had become aware of this theory they would have been powerless to do anything. Zimbabwe at the time of writing is in a similar situation except the pilots are fat wild cats who need taming. But first, they need bells tied to their necks so that we are aware where they are and what they are up to. Unlike Mr. Biti, Vince I don’t believe you have been near any watering hole for the amber nectar. You put your case beautifully but who is going to tie the bells round these unneutered monsters. Bill Clinton once said, ‘—it’s the economy stupid’. In our case it should be, ‘it’s the LAW stupid’. The whole Zanu leadership abdicated responsibility and for now they hope something will turn up. Anything as long as they keep looting. My sincere hope is MDC should not, again, get involved in an adventure which in the long run yield the same result or worse. Brilliant articles and many thanks.
    Simon M Tozvireva.

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      ZimJim 9 years ago

      Well put, Simon M Tozvireva. And well placed, Blackhammer!
      Respect to you both.

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    Nyoni 9 years ago

    Vince article is valid but the question is who in Zanu is listening. The issue of land is important I agree. The problem is which person “given” land notably Zanu will simply give it back .

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    John Thomas 9 years ago

    The foundation problem is not lack of money. This is a consequence only. The entire liberation paradime is a lie. The resultant sense of entitlement is the pollution that destroys everything. Fix this and all the other problems will start to fix themselves.

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    Grocius 9 years ago

    You’ve made far too many simplifying assumptions Vince:
    1. How is it possible that at the same time Government can issue tradeable title of land to its holders and issue bonds internationally based on the same land? If the bond issuer is Government, then the titleholder has to be Government, otherwise how does Government borrow against security that it does not own?
    2. By issuing a bond of such magnitude ($7-$10bn) against land, Government is in essence buying a call option on the land whose strike price is the maturity value of the bond – so should it default and hence fail to exercise the call option (because it matures out of the money), then the bond investors are entitled to taking over the land. Now what does this mean in terms of national security and sovereignty?
    3. To avert the above scenario, you seem to suggest roping in international underwriters. In the absence of a credible repayment plan by Government (the bond issuer), who on earth would underwrite such a bond issue? You will be aware of the basics of borrowing and lending – lenders lend on the basis of project viability, not on the basis of collateral. Your proposition is silent on what new sources of revenue will be available to the Government in the ensuing 25 years, that will accumulate in a sinking fund for the purposes of amortizing the loan.
    4. In its current state, Government is unable to borrow funds convincingly over a long period of time as long as there are no underlying supporting investments made against such borrowings. By this I mean there’s to capitalize the economy through rehab of, and new investment in infrastructure (power, water, transport, etc). So by borrowing in order to compensate former land owners, the funds are not available to recapitalize the economy. Remember that we have a huge current account deficit – so what are the chances of retaining the $7-$10bn to create the envisaged multiplier effect?
    5. About country risk premium – we could never lower this without resolving the sovereign debt issue. Your proposed bond issuance is ambitious to the extent that you assume there will be appetite to lend to Zimbabwe as much as $10 billion before we resolve another $10 billion worth of borrowings.
    6. You have also not addressed downside risk issues associated with the currency of the bond denomination- use of US$ over the next 25 years. Would you be in a position to reassure the supposed bond investors that Zimbabwe will still be using US dollars in the next 25 years, or better still that if the currency changes, the issuer (Government) would be able to honour $10 billion plus interest worth of US dollar denominated borrowings?

    Quite clearly in my view, the intentions behind your article are noble but the financing proposition is fraught with too many simplifying assumptions to make it viable. Much more is needed Vince.

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    I wondering if the african “intelectual”(mbeki) is proud of his huge success here in zims and which of his 2 success stories has killed the most africans(his aids story his zims story).African solutions for african problems!!!!???

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      The sad thing is, they look around them at their little clique and see how lavishly they live, mansion, smart cars, children enjoying education at private schools and they think they have succeeded. Once again I say, they are rotten to the very core!

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    Dear Vince My Bro

    In your article i got the whole picture and Sense of this strategy of reviving our economy so as BLACK HAMMER, i agree with him that who will be (((NYAKABUSU))) of them and who will tie the bells to their necks so that we are aware where they are and what they are up to.

    Without that the plane will varnish and we will soon again be in hast of sending another rescue team to look for them…..

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    Senzachena 9 years ago

    Mbeki has Zimbabwe blood on his hands, I hope he sleeps well at night

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    Angela Wigmore 9 years ago

    Such a shame about Gwebi being defunct – it used to be one of the finest agricultural colleges in the world. But so saying, many institutions in Zimbabwe USED TO BE amongst the finest……

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    former farmer ( White ) 9 years ago

    This idea of bonds has been about for over a year now and I for one do not see them as the solution as they are not water tight and the cash generated will be squandered and after 5 years or so the land invasions will commence again ( when the next president want to secure his second term in office, amend the constitution and rule for life ). In other words they have no security besides the interest rates which will only equate and income of US$5 and US$15 000 pa which therefore will attract little response from the title holders. I could make 20 times that in a year farming.

    The issue of addressing the land issue and compensating the rightful owners has the pre-condition of only with a legitimate government, so until that happens we will have to wait.

    The bullet needs to be bitten and the constitution honoured and ALL ZIMBABWEAN’s should be treated accordingly, respected and invited to participate in the future of our nation.

    The idea of training new farmers at institutions such as Gwebi or Blackfordby is a good idea but that will take a minimum of 3 years training and only when you have the right student who has the passion for and desire to be a farmer. To succeed he has to do like most of the former farmers did, get a diploma, get a job on a farm, work hard, save his bonus’s and build up to a loan from the AFC for a leased farm which in turn will make him a profit leading to him owning his own property after 15 years or so.

    Farming is a business not way of life and must be seen as such.

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    Mutorwa 9 years ago

    Do you guys seriously expect that anyone in this “GOVT” is worried about this?

    What kind of a president, in an economy such as this would:
    (I) Ensconse himself with a 90year birthday party such as we saw?
    (ii) Spend USD2million entertaining 5,000 hangers-ons at his USD20million mansion on behalf of his :daughter at her wedding?
    (iii) Hold a follow up birthday party at a local hotel where another USD2million was blown?

    All that within 3weeks.

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      Angela Wigmore 9 years ago

      Are you intelligent, sensible chaps ensuring that the rural folk know about these monstrous shenanigans? It seems, after all, that these are the people who keep voting Bob back into power. Get cracking on some serious re-education at grass-roots if you ever hope to get rid of ZANU.

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    Rwendo 9 years ago

    I am not qualified to comment on the technical aspects of the discussion above. But for me, before even getting there, not only are there problems (already stated by others) with 1. Who, truly, who is listening in this government? For them, its all politics and personal survival first, principles later. 2. Who would tie bells around their necks even if they did listen? Overriding this is 3. To me the whole concept of “economic revival” within our situation is reminiscent of the MDC leadership’s approach between 2009 and 2013.

    It is like finding oneself as a peasant under a cruel, sadistic and exploitative landlord and then saying, “Well, I might as well make the best of things and grow as much food as possible and hunt for the both of us. That way there will be more left over for me and my hungry family” Surely the last thing your situation demands would be that you stabilize and strengthen your oppressor?

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    The economist Canuck should be listened to. Vince you are right too. In essence with Zanoids in power forget anything happening

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    farai 9 years ago

    We need to start thinking like Rhodesians, think outside of the box! These guys designed a system
    that worked for them from basic principles.

    These copy and paste prescriptions are uninspired! Honestly this is another naive worthless proposition from Vince that ignores fundamental issues, whose land is it anyway and who needs to be compensated? This proposition is not even about getting productivity up on the land, it’s primarily about compensating former white farmers for land redistribution and “de-Zanufying our country” I got news for you Vince, it’s not going to happen, never! We need more and not less Zanufication!

    The price that the “international markets” read the western capital, will demand to support our agricultural productivity will be so huge, we might as well surrender our independence and spit in the faces of all those who fought for it! Forget about international bond markets they would murder us and keep us in bondage for infinity, that’s what they do! We have adequate resources locally to not only revive our agriculture but also get our economy on a positive trajectory as well but we lack the political will to take the necessary initial painful decisions needed.

    Consider this Vince, we have in the past 5 years invested $4billion in cars we will never drive, a further $20billion in houses we can never live in! This is all because we have failed to direct investment capital to productive assets and even punished those who dared to (insurance, shares and savings). This has driven investment capital from longterm productive to short-term consumptive sectors. That’s not how you build an economy! Imagine unlocking even half the resources we have invested in these short-term investments and properly directing them where we need them most? What is missing in
    our agriculture is right type of funding, contract farming is one instrument showing potential, we can attract capital, local and international, if we offer an attractive enough return and produce needed by all those people who do not have the resources we have, land and climate.

    Who needs an international bond then? Forget these sharks Vince, they will swallow you and your entire national gene pool for generations to come, big money doesn’t play fair especially if it assumes a geopolitical agenda!

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    farai 9 years ago

    Just last week two listed companies, First Mutual and CFI announced plans to invest in housing development. Quick buck syndrome driven by short-termism, one is expecting a return of $21million on an initial outlay of $3million. 700% in 2 years! The other is busy depleting assets, land, to unlock quick cash for executive perks.

    First Mutual should be investing policy holders premiums in CFI so that CFI can recapitalize it’s operations but that’s too hard for our current crop of industrialists and bankers. They would rather kill the breeding herd than wait to eat the steer! The ultimate negative in economic liberalization is the chaos you see in our high-street pavements! Bring out the Rhodesian economic blueprint and learn, controls are not bad after-all!

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    The Truth. 9 years ago

    History should teach you to choose leaders on merit and stop voting for leaders on tribal lines!!

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    moyokumusha 9 years ago

    Farai, I do not know where you come from but your thinking is very warped and totally wrong. So you say don’t look to the west crooks. I will say this to you. Look west, its best. look east and only they will feast. Think about it.

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    farai 9 years ago

    Moyo-whatever, i come from Africa, was born in Southern Rhodesia and i live in Zimbabwe. How does that affect the prize of mhandire? You criticize my thinking without qualifying your argument. Then you go on to judge the east without justification. And that passes for intelligent comment?

    If you re-read my comment I never insinuated that we should look east. I believe we have enough resources locally to revive the economy and agriculture but we lack the political will to make the necessary decision. The cornerstone of the Rhodesian economy was rigid self reliance to drive import substitution. That’s the thinking we need to borrow from that racist lot. This business of allowing everyone to do as they please with “their money” is rather naive democracy and misplaced prioritization. Controls are necessary to direct expenditure towards economy boosting investments. And you find this to be pro-east, “warped and totally wrong? I dont know man, freedom of speech is overrated in your case!

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      Angela Wigmore 9 years ago

      I am going to go somewhat ‘off-tack’ here but I want to stand up and be counted because I am tired of turning the other cheek and accepting insults just because that is the politically-correct thing to do. I am a white Southern Rhodesian, born of British ‘settlers’ who emigrated to start a new life during the post-war drive to expedite the Rhodesian infrastructure. My father joined the African Affairs Department which was concerned with improving the lot of black Rhodesians. My mother was a nurse who spent half her day working in African clinics.

      I was never brought up as a racist. Nor were any of my many friends and acquaintances. At Secondary school (in the 60s) we were all outraged that we could attend sporting events at Coloured schools but they could not set foot on our fields. And we had no interaction at all with Black schools. I and my contemporaries were well aware that this was wrong.

      It would take a book to elucidate the many instances whereby ordinary white Rhodesian people have attempted to correct some of the imbalances of early colonialism. And I am greatly offended at being labelled amongst ”that racist lot”!! Is it impossible for black people to accept that white people could be their allies, not enemies?

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    farai 9 years ago

    Angela, you did not do enough! And the answer to your last question is a big bold YES IT’S IMPOSSIBLE! This forget and forgive won’t wash, the scars are too deep. At the opportune moment, in this millenium or the next, we will colonize you and enslave you, we will disposs you of your land and your resourses, then we will ask you to forgive and forget.

    You see we too want what you have, at our expense, the wealth, the security and the mountains of food.
    At an opportune time, in this millennium or the next, we will ask questions about how we got so poor when you were so wealthy yet we did all the work and owned the resources. At that moment we will be forced to devise a system for equitable wealth redistribution and fair compensation for resources. Then and only then can we start the conversation about being allies and not enemies!

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      Angela Wigmore 9 years ago

      Farai: I tried to be reasonable and ”non-racist”. But people like you do not do anything to help. People like YOU, DO MAKE ME RACIST!

      How old are you Farai? What do you know of hardship? Probably only since 1980 and Bob & ZANU. I bet you were not even born before then.

      Grow up Kiddo!

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    farai 9 years ago

    Angela, you did not do enough! And the answer to your last question is a big bold No IT’S Not POSSIBLE! Your father lied to you about the actual job he did at African Affairs. Your mother worked in an African clinic and yet you claim you were not brought up to be racist? Why not have a People Affairs department or a clinic for people as we have now? You knew certain things were wrong, other than outrage you did what exactly?

    This forget and forgive won’t wash, the scars are too deep. At the opportune moment, in this millenium or the next, we will colonize you and enslave you, we will disposs you of your land and your resourses, we will rape your wives and girl children then we will ask you to forgive and forget.

    You see we too want what you have, at our expense, the wealth, the security and the mountains of food.
    At an opportune time, in this millennium or the next, we will ask questions about how we got so poor when you were so wealthy yet we did all the work and owned the resources. At that moment we will force you to accept a system for equitable wealth redistribution and fair compensation for resources. Then and only then can we start the conversation about being allies and not enemies!

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    farai 9 years ago

    Aunt Angie, but you were not thought to be a racist, how is it possible to morph into one? Here is the deal, I was born in hardship and grew up in hardship. You see the good life you enjoyed before 1980 wasn’t mine then.

    Things have been much better under Bob and ZANU-PF because for once everything depends on my merits and not my skin colour or who my parents are. It’s down to me and me only. Can I possible ask for anything more?

    I do sympathize with your lot though. The privilege is gone, the farm too, the servants, the big house with well manicures lawns, the clubs, the schools, the dogs, the horses, the family doctor and hairdresser, all gone. The friends and kids are scattered all over, a whole lifestyle lost. All because you stubbornly refused to share!
    Your life then is my life now. Do you really think we have a common enemy in Bob and ZANU-Pf? I don’t think so. I understand why you would hate him but can you possibly understand why I don’t? Love him actually!