Does command economy benefit Zimbabwe?

Does command economy benefit Zimbabwe?
President Mugabe exchange pleasantries with Vice-President Phelekezela Mphoko, while flanked by First Lady Dr Grace Mugabe and Vice-President Emmerson Mnangagwa just before a Zanu-PF Politburo meeting at party headquarters this afternoon.

President Mugabe exchange pleasantries with Vice-President Phelekezela Mphoko, while flanked by First Lady Grace Mugabe and Vice-President Emmerson Mnangagwa just before a Zanu-PF Politburo meeting at party headquarters. File pic

ARE Zimbabweans so polarised to the extent of simplifying economic debate to binary logic based on political affiliation?
Lack of tolerance and subject matter expertise has seen some economic policy critics simply labelling proponents either ZANU-PF or opposition, without understanding the underlying rationale behind proposed plans.
That said, the name “command economy” has been enough to deter Zimbabweans weary of unnecessary State intervention in their livelihoods from even entertaining the idea.
After all, such economic models are associated with failed repressive communist States.
Ordinary citizens are, therefore, justifiably questioning ZANU-PF’s wisdom in swimming against the tide by reverting back to feudalistic principles in a 21st Century capitalist world.
The World Bank has also expressed reservations about the command agriculture scheme arguing that it stretches the budget deficit.
This prognosis came handy to critics of the scheme.
But of course, the World Bank has its own agenda which serves its influential shareholders.
As such, while the end result is true, their analysis is purposefully silent on the Zimbabwean context of the problem; the change in land distribution structure.
Surprisingly, local critics have also been blind to acknowledge this crucial factor.
Actually, the change in national land distribution saw large scale commercial farmland shrink from almost 50 percent of land area in 2000 to just over 25 percent by 2016. Over the period, smallholder farms increased significantly to around 60 percent of land area, with medium scale farmland representing the remaining area.
Surely World Bank experts should know better that this new ownership structure mix has significant implications on financing and productivity of the sector which cannot be ignored.
New small and medium scale farmers obviously have limited access to capital compared to former large scale commercial farmers.
Therefore, unless the solution is to reverse the land distribution structure, any Zimbabwean government will have to find funding solutions relevant to the current land ownership structure.
One major obstacle to boosting agricultural output is funding. Globally, the sector has unique structural challenges that deter access to finance.
Significant upfront working capital investment is required, whereas revenues are only realised at harvest, with seasonal patterns and varying gestation periods. Financial revenue uncertainty in agriculture also adds to inherent risks of droughts and commodity price volatility.
Communal, small and medium scale farmers, who now constitute the bulk of Zimbabwean farmers, are affected the most as they often lack collateral and/or credit history. Their plight is also complicated by lack of land title, policy uncertainty and their often limited business management skills.
Even for those eligible for loans, the elevated industry risks usually necessitate prohibitively high interest rates which render projects financially unattractive. Also, “new” large-scale commercial farmers have not been spared by financing challenges.
Clearly, therefore, without an immediate financial stimulus, reviving agricultural output is elusive under prevailing circumstances.

Hopewell Mauwa is a UK-based economic analyst. He writes in his personal capacity and can be contacted on hopewell.mauwa@cantab.net

  • kwv

    Without legal ownership, title deeds, agriculture will continue to struggle as land cannot be used as collateral against loans that are required to farm successfully.

  • Chingwe

    Lets just acknowledge that we took land without thinking too much about capital. Its coming back to haunt us. Which ever party takes over the issue will not go. Reversing the land reform is not an option my brothers in opposition.

    • Citizen

      Restore title deeds and open agricultural land to all citizens regardless of race. That is the only honest, decent, democratic move to be made.

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