Property rights and investment.
This one won’t go away, and remains central to the rhetoric of many, across the political spectrum. The argument is simple: without secure (read: private property, freehold title) tenure, land is ‘dead capital’, and so has no or little value. Without title, the argument continues, it lacks collateral value and so it is impossible to raise finance. The model of ‘success’ is the commercial farm sector pre-2000, which had freehold title, and good relationships with the banking sector. The argument is that this needs to be either returned to or replicated now, and that the ‘failure’ of land reform can be explained in these terms. You’ve all heard it – from the likes of Eddie Cross, Ben Freeth, Craig Richardson, and many others. So what’s wrong with the argument, surely secure tenure is important. Yes, absolutely! But there are many routes to tenure security, and elaborate titling is not often the best; a fact widely substantiated by research across the world, notably, perhaps surprisingly, by the World Bank. Permit and leasehold systems may be just as good, and when the institutional and governance arrangements are right, security emerges from communal tenure too, as Nobel Prize winner Elinor Ostrom and others have showed. The ‘dead capital’ argument pushed by Hernando De Soto, and adopted by many free market ideologues has been found wanting. As we have shown, there is much investment going on in some parts of the new resettlement areas, but also a lack of it in others. The variable explaining the differences is not titling or legal form of tenure, but other factors to do with a range of social, political and institutional factors. The relationship between land, collateral and finance is a complex one too. There are many ways of assuring finance institutions that lending money is a safe bet. Land titles are only one route, but there are other forms of collateral, state guarantee schemes, group lending and so on that have all worked well in other places, including in Zimbabwe. There were undoubtedly issues with the original wording of the 99 year leases in Zimbabwe, but there was also intransigence by the finance sector that preferred to lend to larger enterprises and outside agriculture when money was short. Some headway has been made on this, and we must look forward to some innovations in the financing of agriculture into the future. The old model of large-scale commercial agriculture finance is simply not replicable in a more variegated agricultural sector.
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