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Generational Dynamics World View
*** 20-Aug-16 World View -- Zimbabwe launching a Soviet style command agriculture program

This morning's key headlines from GenerationalDynamics.com
  • Zimbabwe police violently disperse protests over new 'bond note' currency
  • Zimbabwe launching a Soviet style command agriculture program

****
**** Zimbabwe police violently disperse protests over new 'bond note' currency
****


[Image: g160819b.jpg]
Protestor holds up a sign saying 'Old clueless Mugabe must go' (The Herald)

As protesters on Wednesday in Harare, Zimbabwe's capital city, started
marching to the Reserve Bank of Zimbabwe to submit a petition over
worsening cash shortages, heavily armed anti-riot police pounced on
them, resulting in the protestors running in different directions.
Some of the angry demonstrators pelted police officers with stones
resulting police firing teargas and using water cannons to disperse
them.

This is just the latest in widespread protests against Zimbabwe's 92
year old president Robert Mugabe, whose decades-long reign has
destroyed what was one of the strongest economies in Africa. ( "23-Jul-16 World View -- Christian pastor's '#ThisFlag' movement threatens Robert Mugabe in Zimbabwe"
)

As recently as the 1999, Zimbabwe was a breadbasket of Africa,
exporting up to 500,000 tonnes (metric tons) of surplus food. By
2003, Zimbabwe was so starved that it had to receive 500,000 tonnes in
food aid from the U.N.'s World Food Program.

What happened during those three years was a Marxist socialist "land
reform" program by Robert Mugabe that confiscated 4,500 white-owned
commercial farms and redistributed the property to his cronies from
his own Shona tribe. Anyone from the hated Ndebele tribe who objected
was jailed, tortured or killed.

Unfortunately, Mugabe's cronies didn't know anything about farming.
Harvests of food staples plummeted by as much as 90%, livestock herds
dwindled and production of the main cash crop, tobacco, slumped badly.
The results were dramatic, and show how it's possible for one
dictatorial leader to destroy a country single-handedly. A formerly
well-fed country had rampant 80% poverty, and the inflation rate went
from 700% to 1000% to 10000% to 150000% and continued rising 500
billion percent.

In 2009, Zimbabwe switched to a dual-currency economy, accepting the
US dollar as valid currency. At that point, the Zimbabwe dollar
collapsed completely, and millions of citizens had their saving
destroyed.

But instead of ending the destructive land reform policies, Mugabe
added on a new one: Indigenization.

Indigenization required all Zimbabwe businesses to be majority owned
by Zimbabweans, again mostly cronies from Mugabe's Shona tribe.
Zimbabwe continues to shut down businesses, including foreign banks,
that do not comply with the indigenization requirements. Just as
Mugabe's "land reforms" destroyed the farm infrastructure, Mugabe's
indigenization law is destroying the entire business infrastructure.

But since Mugabe no longer has the power to print money, he's run out
of cash and is unable to pay salaries of public employees. To solve
this problem, Mugabe is introducing a brand-new Zimbabwean currency,
the "bond note." The bond note is expected to be introduced
in October, and one bond note is supposed to be the equivalent
of one US dollar.

The Reserve Bank of Zimbabwe has claimed that the new bond notes will
be perfectly safe because they'll only be used for limited purposes,
and no one will be forced to use them. Central Bank Governor Dr John
Mangudya said:

> [indent]<QUOTE>"The intrinsic value of the export bonus or incentive
> scheme is to attract and enhance exports by Zimbabweans so that at
> the end of the day there is enough foreign currency in this
> country,” said Dr Mangudya.
>
> “If you are getting a $400 salary, you will still get $400 in
> United States dollars, bond notes, rand or euros. If you don’t
> want them then you use plastic money. We are not forcing anybody
> to use bond notes."<END QUOTE>
[/indent]

This triggered the protests and demonstrations because most people
assume that Mugabe is lying. Some people are claiming that the
bond notes will be as worthless as toilet paper.

In fact, Mangudya has already been forced to retract those claims, as
he had to admit that public employees are going to be partially paid
in bond notes. However, he added that the bond notes will still be
perfectly valid, because they'll be backed by a $200 million loan from
the African Export-Import Bank.

But an opposition Movement for Democratic Change (MDC) official
claimed last week that the $200 million loan will not last long, since
the authorities are planning to print as much as $2.5 billion in bond
notes, potentially triggering a new round of hyperinflation. The Herald (Harare) and VOA and News24Wire (Cape Town)

****
**** Zimbabwe launching a Soviet style command agriculture program
****


[Image: g160819c.jpg]
50 billion Zimbabwean dollar note from 2008 hyperinflation

Zimbabwe's 92-year-old leader Robert Mugabe, who destroyed much of the
country's agricultural capacity with a "land reform" program that
split up the farms and handed them to his cronies, is now launching a
"command agriculture" program similar to the agricultural
collectivization programs that failed so disastrously in Josef
Stalin's Soviet Union and Mao Zedong's China, causing tens of millions
of deaths.

The new "command agriculture" program will cost $500 million to start,
to purchase seeds, fertilizer, tractors and irrigation systems. Each
participating farmer will be given the seeds, fertilizer and equipment
for free. The farmers will work under strict supervision of the
government. Each farm will be required to produce five tonnes (metric
tons) of maize for each hectare of farmland.

The farmer will be permitted to keep for himself all the maize he
produces that exceeds five tonnes (metric tons) per hectare. There
has been no announcement of what happens to the farmer if his yield is
less than five tonnes per hectare, though we know that in the case of
the Soviet and Chinese command agriculture programs, farmers who
didn't produce were starved to death or were executed.

Zimbabwe's spring planting season begins in November (in the southern
hemisphere), and so this program is supposed to begin at that time.
At five tonnes per hectare, the government expects to produce two
million tonnes of maize on 400,000 hectares of land, which would
exceed the annual demand of 1.5 million tonnes.

According to Ryan Truscott, the Zimbabwe correspondent speaking
on Radio France Internationale (my transcription):

> [indent]<QUOTE>"Farming union officials say that that figure of five
> tonnes per hectare is far too ambitious. In a very few cases you
> can get five tonnes, or even as much as ten tonnes per hectare,
> but the average is just over half a tonne per hectare.
>
> So there's a very real possibility that the farmers won't reach
> the five tonne targets, and won't be left with anything for
> themselves. What happens in that scenario, for now we don't
> know."<END QUOTE>
[/indent]

Another issue is the question of where the $500 million is coming from
to fund this program. As we wrote in July, Zimbabwe currently owes
$10 billion to the IMF, World Bank and the African Development Bank,
with $1.86 billion in debt repayments in arrears, and is begging for
more investment money. ( "1-Jul-16 World View -- Zimbabwe, Venezuela, Puerto Rico - three amigos in Marxist economic destruction"
)

The government says that's all under control. Since the public banks
are no longer available for borrowing more money, Zimbabwe will borrow
from private banks, according to Zimbabwe's vice president Emmerson
Mnangagwa, who says that the money will be used to import farming
equipment from Brazil, Belarus, Russia and India.

The private banks have not been named, but according to Mnangagwa:

> [indent]<QUOTE>"The program is not being run on the budget (so) we
> are raising funds from the private sector and we are quite
> advanced at securing these funds. This is a cost recovery
> program, nothing is going to be given for free.
>
> We cannot put a figure now. We are well advanced in negotiating
> such facilities and many private companies are coming forward to
> make offers because it is guaranteed that they will have a return
> from the loans that they may advance."<END QUOTE>
[/indent]

If, in fact, Zimbabwe is unable to borrow the money from private
banks, then they may attempt to pay for the program with their new
"bond notes," and that will cause real problems. Zimbabwe Mail and The Herald (Harare)
and The Zimbabwean


KEYS: Generational Dynamics, Zimbabwe, Robert Mugabe,
Reserve Bank of Zimbabwe, Shona, Nbdele,
John Mangudya, Movement for Democratic Change, MDC,
Command agriculture, Soviet Union, Josef Stalin,
Mao Zedong, China, Ryan Truscott, Emmerson Mnangagwa

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RE: Generational Dynamics World View - by radind - 05-14-2016, 03:21 PM
RE: Generational Dynamics World View - by radind - 05-23-2016, 10:31 PM
RE: Generational Dynamics World View - by radind - 08-11-2016, 08:59 PM
20-Aug-16 World View -- Zimbabwe launching a Soviet style command agriculture program - by John J. Xenakis - 08-19-2016, 09:35 PM
RE: Generational Dynamics World View - by SomeGuy - 01-18-2017, 09:23 PM
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