Zimbabwe President Mugabe Obstacle to Business
PRESIDENT Robert Mugabe’s stranglehold on power, along with the ongoing acrimonious internal strife within Zanu PF, have created an uncertain political environment which is militating against successful agri-business in the country, a study by the Dutch government has revealed.
Mugabe, who turned 91 a fortnight ago, has ruled Zimbabwe since Independence from Britain in 1980 and over the years has been seen as creating serious divisions within his party in order to perpetuate his stranglehold on power.
“With an aging single ruler without a clear path for succession and different factions within the ruling party positioning for the day after, the political situation is still unstable,” reads part of the report released by the Netherlands embassy in Harare last Thursday.
This, according to the report, has created an uncertain business environment hindering success in agri-business.
“The business climate definitely is high-risk with limited formal business and investment protection. The judiciary is highly politically compromised, although one that still makes periodic rulings against the government, often on technical grounds,” it says.
While noting the country’s potential for success deriving mainly from a favourable climate, good soils and a well-developed riverine system, the report points to a host of challenges, chief among them the loss of tenure and security which followed the chaotic land reform programme.
“All agricultural land has been nationalised after 2000 and redistributed. However, the beneficiaries from the land reform do not have title deeds and are not in a position to transfer theirland rights legally,” the report states.
“Currently, the government is preparing an agriculture land redistribution system based on 99-year land lease agreements. The future status of the current beneficiaries of the land reform programme is uncertain. With the land reform, experienced farmers were replaced with a larger amount of less experienced farmers.”
The land reform exercise began in 2000, ostensibly to redress colonial imbalances where most of the fertile land was in the hands of just over 6 000 white commercial farmers.
However, government has failed to provide new farmers with security of tenure, merely giving them 99-year leases which have thus far been rejected by lending institutions as collateral for much-needed loans to kick-start business.
Moreover, as noted in the report, government has bred more insecurity and uncertainty in agriculture through its failure to compensate for land grabs and to respect bilateral investment protection agreements (Bippas).
“Even though Dutch assets are in theory protected by Bippa, in practice most investments related to land have in fact been contested by individuals and groups in Zimbabwe. Although the obligation has been acknowledged by the Zimbabwean government, no compensation has been paid yet for misappropriated from Dutch investors,” the study concludes.
The report also notes problems with the indigenisation law requiring foreigners to cede 51% stake to black Zimbabweans, describing it as “not yet transparent”.
Another challenge noted include financial sector vulnerabilities.