Money matters: Prevention better than cure

The government will fork out $64.5m this year on importing 150,000 tonnes of maize from Zambia. The private sector too is going to import maize from South Africa, and will pay millions of dollars.

The country, therefore, is going to spend hundreds of millions to avert hunger, with estimates saying that about 2.2m people will need food in the next few months.

We are facing this food crisis largely because of lack of irrigation systems, lack of irrigation infrastructure, lack and delay of agricultural inputs and, of course, poor rains. Zimbabwe can have a good agricultural season, even in years of erratic rains, by using its water reservoirs, improving the efficiency of water harvesting and getting inputs on time in enough quantity and at a decent price.

When we look at the amounts of money spent on food safety nets and on importing food, one begins to question whether our priorities are right. Why is it that we want to act to cure hunger when we can prevent it in the first place?

The hundreds of millions spent on food aid and in averting food deficits say it all. If that money were initially extended to fund agriculture, we would actually be telling a different story right now.

If government will always ultimately pay for the errors made in agriculture, why not avoid them in the first place? Why can’t we act to avoid a crisis, when we know that we are going to have to act at a higher cost when the crisis comes?

Public policy

While the local farmer can sell a tonne of maize to government for $380 and expect to be paid at an indefinite date, the government is prepared to pay Zambian farmers $480 cash up-front for every tonne of maize it buys. In other words, if local farmers have a good harvest and sell the 150,000 tonnes of maize to government, government saves about $7m. That money could be used to finance the $7m revenue deficit in the just ended quarter.

A significant chunk of Chinamasa’s budget is going to be channelled towards creating safety nets for the fall-out from socioeconomic issues that could have been avoided. That speaks volumes about our lack of clear resolve in addressing fundamental issues of public policy.

Our revenues are not growing as we want them to, and we ought to ensure that every cent spent in the budget is going into investment, so that we can generate more revenue.

We should make no mistakes this agricultural season. We should endeavour by all means to prevent what can be prevented and minimise what can be minimised.

Speaking in Parliament, Hurungwe West legislator Temba Mliswa said: “The rate at which we are importing maize clearly cannot help us in the aspect of food security. We must avoid the gross thinking that says if we fail to grow it, we can always import it. Let us grow it here, as that will help us to rationalise our expenditure and reduce our trade deficit, and allow us to save.”

CFU proposal

I also believe that government should seriously pay attention and consider the proposal made by the Commercial Farmers Union, which was unfairly judged by the media.

The proposal sought to unlock value of the nation’s principal asset and use that value to drive production, economic growth, capital gain and job creation.

For the proposal to work, CFU said government would first have to acknowledge the debt owed to the former farmers as compensation for their farms. For every title deed held by former farmers, bonds would be issued to a value corresponding to the value of the farm.

The bonds would be internationally underwritten and managed by an international accountancy firm. These bonds would be tradable, interest bearing and could be redeemed over ten years in annual instalments. Since the bonds would be underwritten, they could be used as collateral to obtain loans.

“This allows the former farmers to invest money straight back into the economy, starting new business and generating jobs,” said the CFU.

In simple terms, the CFU proposal seeks to capitalise the lost value and put it back into the economy. The proposal also endeavours to guarantee the security of tenure of new farmers, give them access to affordable credit and long-term investor confidence.

In my view, this proposal offers a win-win situation and government should consider it. This deal will also benefit the entire economy.

Last month, government was told by Billy Rautenbanch’s Green Fuel to increase mandatory blending to 15 per cent in return for funds for agriculture. The CFU deal can certainly not be compared to that. Our growth model should be inspired by the saying: prevention is better than cure.

Post published in: Business

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