Expropriation Without Compensation: The Eventual and Fatal End

This piece is the transcript of a lecture titled: “Expropriation Without Compensation: South Africa, Welcome to Zimbabwe,” delivered at the Conference on Security of Property Rights in Johannesburg, South Africa, organized by the Free Market Foundation, on November 20th, 2018.

Glimpses of the Glorious Past

There is credible evidence that before expropriation without compensation, Zimbabwe was a net exporter of food while, according to the General Agricultural and Plantation Workers’ Union of Zimbabwe (GAPWUZ), pre-land reform employment in the sector was no less than 200,000 people.¹ 

Although one can argue that the Lancaster House Agreement perpetuated white land ownership privilege,² I still believe that securing the sanctity of property rights gave the country confidence to strengthen and expand its industrial base. Today, due to the flight of capital over the last two decades, Zimbabwe is importing almost everything, hence our huge trade deficit.

The once thriving irrigation infrastructure was vandalized. Farm occupiers who had no knowledge or skills of large-scale commercial irrigation farming exposed Zimbabwe’s population to the vagaries of rain-fed agriculture. The once-booming cotton and textile industry died while National Railways of Zimbabwe that used to supply tobacco farmers with coal is almost defunct.

If agriculture is the mainstay of Zimbabwe’s economy, there is absolutely no way our economy can grow if sanity is not restored in this sector. And this sanity starts with a full respect and restoration of property rights. A renowned Zimbabwean economist once said “In Zimbabwe, nobody feels safe when the state can authorize itself to take people’s property. This country will recover fast if the government promises to respect property rights and revives the rule of law.”³ 

Moreover, “the land reform programme resulted in significant economic disruption as the full bundle of rights that previously drove commercial agriculture were taken away. The vesting of ownership and control of access to land in the hands of the State destroyed the land market, scaring the banking sector.”

Some reports say that Zimbabwe was a leading exporter in horticulture second only to Kenya. The Southern African country used to have a vibrant horticulture industry, but it was decimated by former president Robert Mugabe’s chaotic land reform exercise in the early 2000s that was aimed at addressing colonial land imbalances.

For many years, the national airline, Affretair, had run a thriving business of flower and fruit exports to the European Union market but was liquidated due to the demise of Zimbabwe’s agriculture sector – among other operational handicaps.⁴

Supremacy of the Constitution

I know that the proponents and purveyors of the EWC narrative will argue that once embedded in the constitution, expropriation must be honored. My point of departure is that there are good and bad laws. Any law that is open to abuse by the government; any statute that ultimately benefits the small ruling elite must surely be a bad law.

This is why the world condemned apartheid, which was a manifestation of bad laws. The same constitution that exalts the virtues of the right to property cannot pass a test of legitimacy when it takes away those rights based on purportedly reversing injustices of the past.

This is why the ruling elite in Zimbabwe ended up holding all the choice pieces of land while the rest of the so-called land beneficiaries were banished to game parks and non-arable lands. South Africa is renowned for constitutionalism and EWC can only destroy this reputation. With the level of corruption in high places, South Africa is opening a new frontier of a black-on-black land revolution and sooner, rather than later, the poor majority will start demanding justice from new black landowners.

Cost of a Bad Land Reform

There are different opinions on this, but credible evidence exists that Zimbabwe’s trillion percent hyperinflation of 2004 to 2009 was largely due to Mugabe’s fast-track land invasions, this according to Professor Steve Hanke of the John Hopkins University who has been tracking Zimbabwe’s monetary collapse for almost two decades.⁵

The Mugabe regime was isolated and treated as a property rights abuse pariah state, so it developed new ways of financing its budget deficit. The massive flight of capital, US-imposed sanctions and a high credit risk that drove away multilateral lending completely trashed our local currency as products gradually disappeared from stores. There was only a fraction of sanity when the opposition-inspired GNU government pushed for the adoption of the US dollar as ‘legal tender’ in 2009.

Money is extremely vulnerable when property rights are abused. I, therefore, would like to know, how will South Africa stem the tide of global financial anger if EWC is legalized? Are you ready, let alone aware of the devastating consequences to your fiscal and trade affairs? Obviously not. But let me conclude.

Do not be fooled by extremist groups who claim EWC can be done so well as to immunize South Africa from being Zimbabwenised. Mugabe did not embark on land expropriation and invasion to empower black Zimbabweans, it was rather politically expedient for himself and his cronies. As Robin Palmer puts it, “In 1989, with an election due the following year, there were votes to be won, and the government desperately needed an issue on which it could try to regain some of the popularity it had lost in the course of the notorious and long-running corruption scandal known as ‘Willowgate’.”⁶

Besides, we now know that “Zimbabwe’s land reform entered a downward spiral characterized by violence and political opportunism. This chain of consequences continues until today with enormous economic, social and political ramifications. Both within Zimbabwe, and the southern Africa region.

Therefore, South Africans should ask itself, is it convinced that EWC will extricate its people from poverty? Can you, South Africans, not take lessons from Zimbabwe’s experience EWC, like Mugabe’s fast-track land invasions, is not just a blatant violation of property rights but a recipe for poverty and hatred.

_____________

1. It may be a question of speculation, but according to the General Agricultural and Plantation Workers’ Union of Zimbabwe (GAPWUZ), “Perhaps 200,000 workers and their dependents, about 1.5 million in total, live on these farms. If they are displaced and only a handful are given land, Zimbabwe faces a social catastrophe. Analysts say only a gradual land reform programme, helped by generous donor funding, could manage a smooth transition without creating more poverty.” The Employed Report, GAPWUZ white paper, Gerald Magadzire, 2002.
2. The land was to be redistributed on Willing Buyer Willing Seller basis for the first 10 years awaiting policy review
3.  By all accounts, Finance and Economic Development minister Mthuli Ncube is a brilliant man, a financial engineer with a wealth of experience in both the private and public sectors. His appointment to head Zimbabwe’s Treasury seemed God-sent, and ideal to steer President Emmerson Mnangagwa’s Second Republic drive towards economic salvation.
4. Affretair was liquidated in 2000 under a $511 million debt that had grounded its only aircraft for close to two years. In October 2001 it was reported that Affretair, currently under liquidation, was selling its assets to raise money to offset its mounting $800 million debt owed to several creditors.
5. When President Robert Mugabe’s party, ZANU-PF, regained control in Zimbabwe in 2013, government spending and public debt surged, resulting in economic instability. To finance its deficits, the government created a “New Zim dollar.” 
6. Tekere speaks out on the land issue’, Financial Gazette, 21 July 1989, Robin Palmer, Land Reform in Zimbabwe, 1980-1990, African Affairs, Vol. 89, April 1990.