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1 5th August 23:19
robert kay
External User
Posts: 1
Default White farmers apply for 99 year lease

The announcement that about 200 white farmers have applied for 99-year
leases under the government's new land tenure policy has been acclaimed as a
climb-down by President Robert Mugabe and a reversal of past policies. This
is simply not the case. The fact that the process is taking place alongside
eviction orders - with just 48 hours' notice - served on 20 white farmers
last week shows that policy has not changed. Far from being a climb-down, it
is a clever attempt to deflect international criticism of the land seizures
and, quite possibly, kibosh efforts by farmers to secure international
support for compensation demands. Those who sign the leases may be signing
away the last hopes of disposed farmers to secure compensation. Justice For
Agriculture (JAG), the organis ationthat represents the majority of evicted
farmers, says farmers would be "insane" to go along with the offer. JAG's
John Worsley Worswick says farmers will not get title deeds and will
therefore be unable to borrow against the land to finance essential inputs.
He notes also that under present law the maximum lease period is only 10

Meanwhile, in an effort to pre-empt the expected outcry when the April
inflation figure, probably over 1 000% , is published, the government
launched yet another economic recovery programme. The US$2,5bn National
Economic Development Priority Programme (NEDPP) focuses on curbing
inflation, stabilising the exchange rate and boosting agricultural
production. Within days of the promise to tackle inflation more vigorously,
the government announced massive wage awards, some as high as 300% , to the
civil service, including the security forces. An average 250% increase will
cost the government Z$80 trillion or 25% of GDP and ensure that inflation
averages upwards of 800% during 2006. Though the economic plan was approved
by the Zimbabwe National Security Council, chaired by Mugabe himself,
economic development minister Rugare Gumbo insisted at the launch that there
was no sinister security agency involvement. Media claims of militarisation
of the economy were "hogwash", he said.

It's an adjective that some economists and ****ysts are applying to the
latest economic programme - the fifth such turnaround plan in the past seven
years. The plan is long on administrative detail but thin on policy content.
It includes the creation of a plethora of committees and task forces,
staffed by civil servants and private-sector executives who will be
responsible for mobilising foreign exchange, deploying and retaining skills,
and programmes of import substitution, funds for distressed businesses and
the promotion of small- and medium-scale companies. All this has been heard
before and the sole fresh elements are the promise to raise US$2,5bn over an
improbably short period of three months, and the greater involvement of the
private sector. There are no indications of who will provide the $2,5bn ,
nor indeed whether all of it is to be raised offshore. With foreign debt at
almost US$5bn , foreign lenders and investors are unlikely to respond
positively. Efforts to raise a US$1bn credit from SA having reportedly
collapsed, Harare will be forced to look to China, Malaysia, or possibly
India and Iran. Mugabe's reaffirmation last week of his government's plans
to nationalise foreign-owned mining companies will not help either, nor will
the fact that the envisaged $2,5bn credit is nearly double annual export

Though tackling inflation is a stated priority, the injection of $2,5bn
would be hugely inflationary. At current exchange rates this is equivalent
to 70% of GDP in a country that has a negligible, possibly even negative,
national savings rate. In all probability, the bulk of the money will have
to be raised locally, meaning massive central bank credit creation and even
higher inflation. The plan is silent, too, on immediate business concerns,
such as conditions in the money market and exchange rate strategy. The
Bankers Association warned the Reserve Bank of Zimbabwe (RBZ) recently that
its tight money policies could cause bank failures. Exchange rate strategy
is shrouded in uncertainty. The interbank (market) rate for the Zimbabwe
dollar has been pegged at Z$99 200/US$ since late January, since when prices
have increased 80% . By effectively devaluing the Zimbabwe dollar by 36% for
gold and tobacco producers, the central bank has acknowledged that the
currency is overvalued and should be adjusted. This could happen when RBZ
governor Gideon Gono presents his midyear monetary statement, but he is
under pressure from exporters to devalue sooner and by at least 40%-50%.

In an effort to talk up the economy, optimistic growth and inflation
forecasts are being made. In his April 18 Independence Day address , Mugabe
predicted GDP growth this year of between 1% and 2% and, though this is
lower than the 3,5% forecast in March by finance minister Herbert Murerwa,
it is far more upbeat than the IMF's projection of a 4,7% decline. The IMF's
inflation forecast of an average 850% for 2006 is more realistic than the
government's year-end target figure of 80% . According to the IMF, when
inflation exceeds 40% , GDP growth turns negative, implying there is no
chance of Zimbabwe achieving positive growth this year or next. The NEDPP is
unlikely to make a difference unless underpinned by an international
bail-out, including debt relief. This will not happen unless there is
political change, without which the stalemate will continue.
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