Of partnerships, ownership and control

20 Mar, 2020 - 00:03 0 Views
Of partnerships, ownership and control The agricultural sector is the one where the indigenous already have some capital in the form of land

eBusiness Weekly

Clifford Shambare
In Zimbabwe, business partnerships have become popular these days. In this case they are known by their popular acronym — that is PPPs, or three Ps. This acronym stands for Public, Private Partnerships.

Generally speaking, in business, partnerships are a common feature in service (provision) companies such as law and accounting firms. In such organisations, there are clear laws that govern the aspects of ownership, sharing of profits, inheritance issues and so forth.

In our case, Government has been the initiator of the concept. Its aim here is to enable indigenous Zimbabweans to acquire capital in order to become fully involved in the running of the economy.

Since the agricultural sector is the one where the indigenous already have some capital in the form of land, this is the sector which the Government considered the easiest entry point in order for this strategy to succeed.

The aim of this analysis is to determine whether this strategy is working or not. If not, why not?

As far as this matter is concerned, my passion has always been to see a situation where such partnerships ultimately lead to a sustainable and viable economic condition for the indigenous of this country.

So let us start by scrutinising the relevance and appropriateness of land as capital for this purpose. In one of my articles in this paper: “Can the African become a true capitalist?” I explained that land is the root and anchor of capitalism.

However, this role of land is not to be taken for granted. This implies that the ownership of land alone does not necessarily lead to economic success for the owner of that land.

So, in order for the system to work, this capital has to be brought to life. This process involves the creation of other systems and linking them with the land in such a way that it produces economic outputs that ultimately result in the creation and accumulation of (more) wealth for the owner who in this case is ultimately, the Zimbabwean nation.

These systems are natural resources (which are a part of the said land anyway) as well as money and skills — also known as technology.

This of course, implies the involvement of the human being as the provider of the necessary skills/technology and labour, and ultimately — as the driver of the whole system.

This is where, like other Africans, the Zimbabwean is found wanting since he lacks a good part of these attributes in the current era, hence his need for the said partnerships.

At this juncture, we can already see the kind of challenges to expect in the said partnerships.

For example, the indigenous Zimbabwean’s attitude to the matter of land has created a very complex scenario in the country since independence in 1980. And even though during the war period and soon after it, most Zimbabweans were aware that the war was largely for land, there were some elements who fought with the colonists and were generally against the objectives of that war.

This is the element that was later against land reform or indifferent to the programme. However, juxtaposed to this element are those who were, and still are, close to the war veterans but still, with a questionable attitude to the same matter.

This whole lot of black Zimbabweans is the one that has now become problematic in that they treat the same matter with nonchalance.

As a result, they do not really want to be fully involved in farming that land. But since there is some money to be had from it, they go into what seems to be a working partnership with those with capital, most of whom are foreigners.

This situation is worsened by the inability of the indigenous Zimbabweans as a whole, to create a system that legalises their ownership of the same land.

So now, what you have is a situation where the new land owner is virtually an outsider to this system — a passive investor, so to speak. This is a situation that feather weakens considerably, his legitimacy to the ownership of that land.

And logically, under such circumstances, it would not be surprising to find him losing “his land” to the other partner.

Moreover, this is a partner who, in most cases, is the original “legalised” owner of that land with title to same.

Now, let us delve more into this partnership. Looking closely at the matter, we find that a good number of these partnerships are quite loose in that most of them are in the form of unwritten contracts. And the share the indigene gets from the business’ operations is usually not specified in the contract.

In some cases, the indigene gets a percentage of net profit — a profit which he is not involved in the calculation of. In some cases, he is just paid an agreed sum of money, ranging from say, US$50 to US$100 per hectare per season.

In this case, let us suppose one has 100 hectares which he avails to the “partner” who pays him/her a total sum ranging from US$5 000 to US$10 000. But since he has never held such money in one sum in his life, he regards it as “manna from heaven”.

In most such cases, he was last at that farm when he was being shown the land by Ministry of Lands officials. He has not been back to the farm for the past twenty years or so!

It is therefore, not an exaggeration to posit that, for all practical purposes, he does not own that land. It does not need rocket science to see what such a situation implies.

In such a case as this one, he is letting down the whole cause of the liberation struggle without being aware, or even conscious of the implications of his actions, or lack of same.

Considered from the political economy perspective, this attitude and behaviour exonerates, to some extent, Jan Smuts’ thinking regarding the whole African race. (Refer to my article in this paper on the (perceived) mystery of FDI).

At this juncture, let us look at another scenario — a more positive and desirable one. Here we have Zimbabwean partners at various levels, ranging from individuals to companies.

And as I have alluded to above, the former now face challenges in two major areas — that is lack of equipment and working capital.

But as far as general agronomic and animal husbandry aspects of the industry are concerned, we can assert that before economic sanctions were imposed on it, this country had agricultural training institutions that met even the standards in the developed countries.

However, over time, the equipment they used for training purposes became redundant. This situation has had the effect of dropping their standards somewhat, but not to a considerable extent.

Going back to the funding aspect, we find the country currently not having viable agricultural funding systems. It is often claimed from some quarters, that when Agribank — the bank that was set up by the colonial government for this purpose — was commercialised, it gradually moved away from funding farmers. However, a closer look into the matter reveals that this bank failed to carry out its mandate largely because of mismanagement as well as abuse by politicians — a situation that resulted in its failure.

As far as private banks are concerned, these institutions have so far, regarded the land reform programme with something close to disdain.

To me, the reasons for this attitude are obvious. If one looks closely into ZDERA, they will find that its major tool is financial sanctions. This logically means that private banks — including local ones — are to a large extent, bound by these sanctions, not to fund farming activities on “contested land”.

This is the major reason for our current agricultural funding quagmire. It is under such circumstances that we find black Zimbabwean farmers at different levels, seeking financial assistance from sources other than conventional banks.

That said, if one looks closely at international agricultural funding systems —  including those of developed economies — they will come across a rather interesting scenario. Conventional banks, the world over — have gradually moved from agricultural funding. (So to some extent, this situation exonerates Agribank.)

As a result, most countries whose agricultural industries are viable, make use of a host of funding vehicles. In this respect, the EU has no less than five; so has South Africa.

This situation shows clearly, how far Zimbabwe is lagging behind other countries in this respect.

At this juncture, let us go back to our local farmers and the contracts they are going into with external partners. As explained above, the results are a mixed bag. Those local partners who are doing well in this case, are fully involved in the said contracts in that they provide those inputs that they can afford. These range from fuel, fertilisers, seed and chemicals — to manpower and labour. In this case, they have made use of vehicles like the Command Agriculture programme for the purpose.

Here, there is an interesting but worrying paradox, though. The foreign partners/contractors — including former Rhodesians — are the ones who are making the best use of this programme while indigenous Zimbabweans, who are meant to be its major beneficiaries — are abusing it by borrowing inputs which they sell on the black market.

One hopes that most of these inputs end up on local farms. But obviously, inputs like fuel end up elsewhere.

Considered in its totality, this is a case that clearly demonstrates how far we black Zimbabweans are still lagging behind in matters of economic development.

So it goes without saying that there is a need for a real paradigm change in our attitudes and consequent behaviour(s).

In this respect, some respectable Zimbabweans who are closely involved in this case are proposing that Government carry out a diligent reselection process to weed out the said opportunists, irrespective of their social standing, thus leaving those who are serious farmers to lead the agriculture industry.


Clifford Shambare is an agriculturist cum economist and is reachable on 0774960937


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