Zimbabwe needs to engage farmers in the fund raise efforts

The recent political developments have really made sad reading about Zimbabwe’s potential compared to where it is currently going. Politics has overtaken everything such that there is no clear visible national economic model and national will to implement that national economic model. There has been enough analysis on the demerits f the GNU and as such its just like discussing how to pull out the bus from the ditch .The conservation needs to shift to how can we pull the bus ( Zimbabwe Economy ) from the ditch. Clearly there are over expectations on what the GNU can do for Zimbabweans. Zimbabweans need to be realistic and proactive in creating the Zimbabwe we want. The conversation needs to be more about the Economic recovery and investment environment which can be the only way to improve the standards of Living.

The current environment is a product of years and decades of ruinous economic policies supported by a repressive economic environment. One key aspect that has to be addressed is how to attract investors back into Zimbabwe. How to get industries back to be productive. How to stop ZSE listed companies from market cannibalization whereby supposedly industrial companies are forced to trade each others shares instead of expanding productive capacity. A way needs to be found to re-attract the highly experienced commercial farmers. They are critical in assisting recovery of Zimbabwe’s agro-driven economy.

One of the GNU’s key agreement points was that the land reform was irreversible. This is generally understood to mean that those who lost their farms have no recourse to law. The process also kills land as an asset which one can use to access funding., since most ownership is disputed. So there is an urgent need to resolve the dispute so that land once again becomes a real, realizable asset which one can pledge to his bankers as collateral to secure a loan.

Once this ownership dispute is resolved those who are having the land can sell it ,bankers can finance those who want to farm and the owners can get compensated for that land and improvements. And most farmers would gladly accept payment and start all over again as long as they are paid a decent value for their farms or investment into those farms. Therefore the challenge is how to finance compensation to the farmers. Where will the money come from? Who will write the compensation cheque.

This is where the GNU could do wonders in terms of re-assuring farmers and other would be investors. The GNU has been going all over the world looking for financial assistance ,but the use of the funds has been a rather vague statement that the use of proceeds would be “ for Zimbabwe’s economic recovery“. In the world of finance the use of proceeds is critical assessment for who ever is being asked to write a check. So normally the fundraising effort must be focused and clear , vague terms are to be avoided as they normally serve to turn off potential financiers. Therefore when the GNU goes on to say we need money to recover the economy not only are they barking to the wrong tree but also in the wrong forest.

The GNU needs a clear fundraise plan just like any one who is trying to finance their venture. In Zimbabwe’s case since its fairly clear on who may give the money and under what conditions. If and if I was tasked with structuring the fundraise I would prominently include the following .The figures are for illustrative purpose only .

Amount Required ; $ US 5 billion

Purpose ; Finance Zimbabwe Economic recovery

Use of Proceeds ; US$ 2 billion - pay farmers compensation
US$ 3 billion - Health, Education, Infrastructure etc

Road Show Team; A few politicians, bankers, entrepreneurs and farmers.

The rest can be usual formalities but it is absolutely key that in the fundraise amount compensation for the farmers be included. Not just in words but in true spirit of paying a fair price and closing a sad chapter. This is critical as it addresses 2 key aspects .Firstly the former owners would then give up their claim on the land once fairly paid. Secondly the new owners can then get legally and generally acceptable marketable asset which they can sell to anyone including the former owners who would use their compensation to pay for the land .

This sounds rather far fetched and somehow awkward but it is a practical step that can sufficiently address a complicated chapter. It is agreed generally that many farmers would go back to Zimbabwe and resume operations once they are assured of safety, property rights and compensated.

The GNU due to some goodwill still out there can champion this cause and this should be an easy sell to both the farmers and the new farmers or beneficiaries of the land reform. They both need each other. And they all want to move forward , but the lack of fair compensation makes this impossible. So since the GNU declared that the land reform was irreversible ,the same GNU must take the initiative in compensating the farmers and try to re-attract some of them as part of the closure of the process.

This approach will show a serious will and commitment that Zimbabwe is serious about reform and protecting investor interests. The key is to let the international community that yes Zimbabwe acknowledges the need to pay for the farmers and its ready to do that as soon as the International community agrees to avail some of the resources. The farmers don’t have to be paid the full amount at once but can be paid in tranches and as Zimbabwe recovers the state may be able foot some of the bill.

This model or modified version thereof presents a clear opportunity to turn the current exercise from a begging circus into and investment mobilization plan. There is need to send a clear message that we need money and some of this money will be used to compensate farmers , who in turn will re-invest the money in Zimbabwe. This is an opportunity to include the farmers in that process and make them part of the investment mobilization effort with clear commitments that they will be compensated with an expectation that they re-invest into farming and help in the recovery process. It is when things like that start happening that even the international community will be ashamed to keep any form of sanctions on Zimbabwe.

Gilbert Muponda is the CEO and Founder of GMRI Capital .

He can be reached at email ; gilbert@gilbertmuponda.com

Skype ; gilbert.Muponda

Web ; www.gmricapital.com