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Wednesday, July 29, 2009

Letter from the UK

The problems of poverty, racism and unemployment are not simply technical problems in search of the perfect ten-point plan. They are also rooted in societal indifference and individual callousness-the desire among those at the top of the social ladder to maintain their wealth and status whatever the cost, as well as the despair and self-destructiveness among those at the bottom of the ladder.

Dealing with these challenges will require changes in government policy, it will also require changes in hearts and minds.

The case in point here is our beautiful and resources endowed Zimbabwe which we have turned into a laughing stock of the nations because of decadent emotional nationalism devoid of reason and strategy in a planet that is changing every day and living us behind.

The economies of our neighbours Botswana, Namibia, South Africa, Mozambique and Zambia have been flourishing for years while that of Zimbabwe crashed. We are told our collapse is as a result of "illegal sanctions" which stopped us from borrowing money which could have fixed the economy.

This is not true. We could no longer borrow because we had not repaid previous borrowings. Our bankers had already cut us off long before any sanctions were imposed.

So why then are we in such a mess when our neighbours are not? What really caused the problems we face but did not affect the countries around us? Why has it dragged on for so long that we are now even unable to pay the civil service proper wages?

Tha answer is the "Fast Track Land Reform Programme"(FTLRP).It has destroyed the country's economy along with our wealth creating abilities .It has made it impossible to make any economic progress. Allow us to explain how wealth has always been created and why it is we can no longer do so because of the FTLRP and are thus doomed to keep on falling.

All wealth comes from the ground or the oceans. It may come in many forms; minerals,oil and harvests of fish or crops, forests, livestock and wildlife. It may come from using what has come from the earth and adding value to it, for instance converting metals, plastics and rubber into motor vehicles and aircraft. Or it may come from using manufactured items like aircraft and vehicles to satisfy and service the needs of travellers who wish to move from place to place or to use machines to add value to a metal or commodity. But ultimately all wealth comes from the earth; in a nutshell wealth is created by entrepreneurs or businessman investing in the factors of production. These factors of production are land ,l abour and capital. Familiar isn't it?

Why do we not then just get on with it and have our entrepreneurs combine their skills to the factors of production which are staring back at us?
In this way surely we can return to being as rich as or richer than we were before? The FTLRP has made this impossible, it does not matter which way you look at it. The FTLRP through the destruction of property rights has also destroyed the factors of production and erased that necessary economic ingredient, confidence.

Entrepreneurs, those that really matter ,having seen that there was no security of tenure, no property rights in Zimbabwe, have gone. What is more they have taken their capital with them. The capital which remained behind has been destroyed by inflation. Take twenty-five noughts off even Bill Gates' fortune and he too will be penniless like the rest of us.
There is now, as Biti has found out just no money, no liquid working capital left.

What about labour? Surely there must be plenty around. Surprisingly not.
Labour ,especially skilled labour is like money. It is very fluid and mobile. Both flow to where they perceive they will achieve the best returns. Labour moves locally, within the region and overseas. These migrations range from nearby gold panning, to jumping regional borders and may even include finding a financial managerial post in the City of London. Labour cannot sit by patiently waiting for the good times to return, labour must eat as must labour's families.

The land what about it? We are told the land was stolen and now that it has been taken back an excellent state of affairs must prima facie exist.
Then why is it that the land is not properly used , or used at all? Why is the current wheat crop going to be the lowest ever? Why is Biti talking of providing US147 million(from where no one knows) to fund the summer crop which estimates say will cost at least US850 million? If there is no funding,then off course there will also be no summer crop.
All our savings have been eaten up by inflation, nothing is left. Gono can no longer print inflationary Zimbabwe money because he has made it worthless. He has long since ruined our currency through his BACOSSI's and ASPEF's. Our present dire straits are to deteriorate further. There is no money nor will there be any, to import food.

But hang on, why do the banks not provide the money to grow the crops as they used to? Government (for which read the taxpayer)historically was never saddled with the burden of funding agriculture. It is not true, as some politicians would have us believe ,that the banks are just being spiteful. Banks do not lend out their own money, they lend out money that belongs to the public who would have deposited these funds into the banks. If they lend out the public's funds unwisely, these loans will not be repaid. The banks will then have to dip into their own pockets; they will have to use their own capital to repay the depositors whose funds have been lost. In any event the economy has been run down so low that no funds of any consequence remain in the banks longer than a month.
Available funds must be withdrawn to take across the borders to buy more stocks-currently we produce nothing.

This is the crunch. Banks use title to lend ,all sorts of it, to secure their lending; to guarantee that the money they lend and that the interest they levy on these loans will be repaid. Now the title to farmland has been destroyed it cannot be used as security, nor can farmland without funding produce optimally as it used to do. Nor can farmland use its intrinsic value and worth to create working capital for the people to use for projects other than funding cropping and livestock.
These projects include dams, boreholes, equipment, and transport and irrigation development. Commercial farmland now has no value, it cannot be sold, its value has evaporated into worthlessness. Government says it is State Land just as Communal Land is State Land. The Communal Land cannot be sold either; it too has no real economic value.

Lack of security is the whole reason why banks no longer fund farmers; nor can they until title is restored to Commercial Farm Land and title is provided to Communal Farm Land. Then both categories of land can function properly.

Biti admits that in the first six months of this year he has only raked inUS$157million in taxes, yet he budgeted on spendingUS$1000 over a whole year. The reason why the tax income is pitiful is a direct result of economic activity being so putrid. There is no production. As explained the economy cannot recover and will forever remain in this present state of devastation until the factors of production are freed up to allow them to do their job of wealth creation.

Tsvangirai has been around the world looking for funds to rebuild the country's economy. He failed, not because Western nations are unwilling to assist, but because they understand that the factors of production cannot come into play and perform their wealth generating function whilst property rights and interlinked security of tenure are not recognised.
Even the Chinese understand this concept. They know from their own bitter histories that businesses cannot function effectively without security of tenure-be it a mine ,a factory or a farm.

What is the solution to lift us out of this never ending cycle of poverty? It is quite simple and has been laid out for us by a uniquely African institution, the Southern African Development Community(SADC).This is an African institution which understands what makes countries rich and prosperous .In their wisdom they know what is needed to provide a proper framework and economic climate which will encourage entrepreneurs to get into action. Entrepreneurs take big risks when launching new ventures. When the economic climate is not conducive, these new ventures either do not occur, or are moved to countries where chances of success are better. When entrepreneurs succeed in combining their skills, limited capital labour and land, they generate further wealth for themselves and in so doing they produce more taxes for the nation. We must restore production.

This knowledge is encapsulated in the Southern Africa Development Community Treaty. The Treaty draws on the very same knowledge that made our neighbours Botswana, Namibia, South Africa, Mozambique and Zambia far wealthier after independence than they were before. President Robert Gabriel Mugabe recognised this when on behalf of the people of Zimbabwe, he entered into the Treaty by signing it on 17 August1992.As the Treaty requires us to do it was ratified by Parliament on 17 November 1992, thus becoming part of our National law. The Treaty lays down rules of good governance showing how member states should behave to make the SADC a prosperous and delightful part of the world for all of us who leave here.

The overseer of the SADC Treaty was created when the SADC Tribunal came into being. Article 16 of the SADC Treaty recognised the need to establish a Tribunal "to ensure adherence to and the proper interpretation of the provisions of this Treaty.

This was to ensure that the provisions of the Treaty were upheld.
Importantly, our President, with his vision shared by other Member States accepted and undertook that the "decisions of the Tribunal shall be final and binding"(Article 16.5-Treaty).

President Mugabe has become our saviour and shown us the way to save ourselves from the terrible predicament in which we presently find ourselves. We must adhere to the ruling of the full Bench on 28 November
2008 when they ruled that farmers must be left in beneficial occupation of their lands. Those that had been evicted must be paid fair compensation. This will solve the present impasse and open the way to security of tenure and funding from the Western nations.

Since it is beyond the capacity of the current Government to pay compensation to those evicted ,(remember they cannot properly pay their wages)it will become necessary to consider other options. The Tribunal Ruling is binding and we are forced to respect it. It is our salvation and for the sake of us all and our children, we must surely use it .Do we really want another round of hyper-inflation, violence .starvation and instability?

All is not lost Zimbabwe shall prosper. It is time to stop the "war"
techniques of secrecy, snooping, and misinformation used against opponents as tools of domestic politics and a means to harass critics, build support for questionable policies or cover up blunders.

Let us all be guided by what works and not what we wish should work.

All for the love of our beautiful Zimbabwe think about it.


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