COMMENT

Dreaming of a new Zimbabwe (IV)

Eddie Cross writes on the importance of restoring secure title to land

Last week, after dealing with the macro economic framework needed for recovery and then last week, the need to pay attention to essential services was the subject, today I want to go back into the realms of economics and write about property rights. After such lofty subject's such as education and health, property rights might seem a bit mundane but in fact they are about as essential as any other element when it comes to building a successful nation-State. 

In traditional African societies and in Feudal Europe, individual property rights did not exist in respect to land, physical assets and intellectual rights. In Africa control of land was held by traditional leaders and formed the basis of their power and systems of taxation. In many cultures, even livestock might be held by the traditional leaders and form the basis of control over people. 

In feudal times in Europe land was held by the Kings and their key allies and the rest of the population subsisted as vassals - almost slaves. Wealth was accumulated by those in power and was often reflected in huge mansions and castles. Absolute poverty for the rest was common with a great deal of exploitation. Today property rights are taken as a given and these aspects of life in days gone by are forgotten. 

I think that property rights are perhaps one of Africa's greatest challengers. Deserts in Africa and widespread land degradation are fast destroying much of Africa's potentially productive farm land. The Sahara Desert is expanding southwards at a frightening rate while the Kalahari and Namibian Deserts are also expanding rapidly. The reason is basically the practice of common ownership of land and free unfettered access. 

But the problems do not stop there, in a democratic society the very foundations of freedom and political rights are rooted in private ownership of land - without freehold title land users can be subjected to pressure from those who hold the rights of occupation. The colonial powers often withheld freehold rights to indigenous peoples because they wanted control and feared that the ownership of capital in the form of land and buildings might empower them and encourage a challenge to colonial authority. 

Modern agriculture and with it high yields and low costs is impossible without real security of tenure. Farmers must invest in their properties and such investment without rights is not possible or even sensible. But property rights extend far beyond the issues surrounding land and buildings. It should also include savings in whatever form - cash in the bank, insurance policies, shares and minority rights, debentures, treasury bills, in fact anything that is used as a store of wealth - even gold and jewelry. Pension rights for workers is another and the failure of the pension industry to protect pension value during the hyper-inflation era in Zimbabwe has just been the subject of a major Inquiry. 

In the 20th century it was the pension and insurance industry that accumulated savings on a massive scale and then funded development - long term funds. Places like Singapore used these funds to drive the development of the Island State so that today it has one of the highest incomes per capita in the world. Critical to this process are policies that preserve value, hold down inflation and ensure a decent return on investment. Anything that undermines such confidence in the system - corruption, poor macro-economic policies and many other factors not only destroy the value of savings but the system itself. 

When I was 17 I left home and went to work as a farm assistant on a tobacco farm in Mashonaland - before I left home, my father took me to the Old Mutual in Bulawayo and made me take out a small pension fund with life benefits. I paid into that fund for over 50 years and when it matured the company did not even contact me - it was worthless. But when I started, the small contribution I made each month was a big proportion of my salary and was valued at 2 to 1 against the British pound. 

Today I would never advise my grandchildren to invest in a pension fund or even life insurance, to me they are just another scam because I have never seen a poor retiree from an Insurance or pension company and the wealth of those companies is legendary - the Old Mutual is now one of the largest financial institutions in the world. It is a bit like the Swiss banks taking deposits from German Jews in the Second World War. 

Today in Zimbabwe people like myself have confidence that we can own and benefit long term by owning our own home in an urban area, and very little else except physical assets like gold and jewellery have retained their value. 

Farm land, once one of the most prized possessions is worthless. A friend of mine from childhood stayed in the industry and bought a small farm in the Lowveld where he grew citrus, sugar and specialized crops. The month after he paid his last instalment on a 25-year bond with which he purchased the farm, he was driven off his farm by armed thugs. I was there with him when he was alone in his beautiful home and the thugs were stripping his fruit trees and driving 30 tonne trucks through the orchards, destroying the irrigation system. When he could not take anymore, he shot his dogs and left millions of dollars of investment over a lifetime with a suitcase of clothes and a one tonne pick-up. When I drove down the road out of the farm, I saw a policeman in uniform watching the theft of property taking place. 

When such things are happening accumulation of value is very difficult - even impossible, yet without such accumulation no society can advance. In Ruanda, the Government has handed out secure, legal title to over 8 million small scale farmers. The impact has been immediate and dramatic. It has fostered democracy, established stability and overnight has turned millions of families into people with real assets and value. In South Africa, the post transition Government of the ANC has denied new black farmers and house holders in mass housing schemes any form of tenure - for political reasons - they want control over those populations. In the process, they have inhibited wealth accumulation among millions of South Africans and as a result, fostered crime and lawlessness on a scale that now threatens even the fabric of society. 

I hear that one of the planks of policy of a new Government in Zimbabwe will be to restore title rights to land and extend those rights to the whole country, backed by the rule of law. If they make just that one change, they will restore stability and confidence, create wealth on a massive scale and ensure that we will never go back on our new commitments to democracy and freedom. You think I am exaggerating? Just try it and watch what happens. 

Eddie Cross is MDC MP for Bulawayo South. This article first appeared on his website www.eddiecross.africanherd.com