Official crop forecast, newspaper banning and land nationalisation dent government credibility

President Robert Mugabe’s government complains frequently about the bad press it is getting internationally, but in the past few weeks it has only itself to blame. The official claim that the country will have a grain harvest of 2,4 Mt this year (the national consumption requirement), has been dismissed as a gross exaggeration by all independent observers, especially the UN Food & Agriculture Organisation (FAO), which says production will be lower than last year’s 900 000 t. This has further harmed government’s credibility, as has the banning – on technical grounds – by the state media and information commission of a (broadly sympathetic) independent newspaper, The Tribune. Government then shot itself in the foot when land reform minister John Nkomo announced plans to nationalise all “productive land”.

The use of the word nationalisation and the statement that “all land will be state land and there will be no such thing called private land” set alarm bells ringing in Zimbabwe and abroad. Did Nkomo mean that industrial or mining land would be treated similarly, and how would government tackle the highly sensitive issue of communally owned land? Foreign and domestic investment, minimal though it is, will take another knock as a result, while the sharp, public criticism of Nkomo by a junior ministerial colleague, the powerful information minister, Jonathan Moyo, was yet more evidence of just how intense infighting within Zanu PF has become. Cooler heads are pleading for calm, pointing out that land nationalisation requires a two-thirds majority in parliament, which government does not have, but is almost certain to get in next March’s parliamentary elections. Agricultural experts say the decision to replace private ownership with 99-year leases is not objectionable in itself, though the plan to give conservancies only 25-year leases has been roundly criticised as impractical. Replacing title deeds with 99-year leases will be a lengthy and extremely complicated business, especially in the communal areas, and one that cannot legally begin until the constitution is amended, which is at least a year away.

Meanwhile, Zimbabwe has many more immediate problems. Though Reserve Bank (RBZ) governor Gideon Gono is well pleased with the fall in inflation from a peak of 622% in January to 448% last month, he must be unhappy at the widening gap between demand and supply at the foreign currency auction. In the past four auctions the amount offered by the RBZ has averaged US$8,5m, but demand has averaged $16m. Despite this, the authorities have effectively pegged the exchange rate at about Z$5 340 to the US dollar, thereby demonstrating that the twice-weekly sale of foreign currency is certainly not an auction. Instead, the auction is being used as a backdoor means to control both imports and prices, as a result of which the exchange rate is undermining exports. After adjustment for inflation, exporters are about 36% worse off than they were a year ago, which is why Gono is under mounting pressure to let the rate slide or to provide new incentives and subsidies for exporters, especially in the small-scale tobacco sector.

The foreign currency position is precarious – made more so by the claim that government is spending $200m on the acquisition of 12 fighter jets and 100 military vehicles from China. Opposition defence spokesman Giles Mutsekwa says the parliamentary committee on defence only learnt about the deal during a recent review of the defence ministry’s quarterly budget. Pressure on both the exchange rate and inflation will intensify in the final months of 2004 if the independent experts are right and Zimbabwe needs to import between 500 000 t and 900 000 t of maize and another 250 000 t of wheat. Government’s claim that there is a huge harvest has been undermined by its withdrawal from a joint crop survey with the UN, as well as by numerous media reports in Zimbabwe, the US and SA that the country has ordered – and is importing – maize from SA, Argentina and even Zambia. FAO and nongovernment al organisation Fewsnet have both promised to clarify the grain situation later this month. eanwhile, the consensus view is that the harvest will be larger than last year’s 900 000 t but way below the official projection of 2,4 Mt. Some analysts expect a harvest of 1,25 Mt, which would leave a 600 000 t shortfall for current consumption and another 500 000 t to rebuild the strategic reserve. If grain imports are necessary, Gono’s chances of holding the exchange rate and inflation will be dented.

Source: Financial Mail (SA)
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