AfDB mulls US$3.5bn package for former farm owners

NDAMU SANDU

The African Development Bank (AfDB) said Monday it is  assisting Zimbabwe in setting up a financial $3.5bn debt instrument to compensate former commercial farmers owner, that lost land during the land reform programme.

Zimbabwe is battling to compensate the former farm owners and its proposals to use government securities as compensation have been rejected by the former farm owner who want to be paid now, taking into account the age profile of members of the constituency.

“We are currently working with the minister of finance, the government of Zimbabwe to develop a financial instrument that could potentially be useful to frontload the mobilisation of US$3.5bn for this compensation,” AfDB president Akinwumi Adesina said at the High Level Debt Resolution Forum in the capital, Harare on Monday.

The AfDB chief was appointed as the champion of Zimbabwe’s arrears and debt resolution process as the country seeks to normalise relations with bilateral and multilateral creditors.

Adesina encouraged the development partner to “work with us on this proposed structure with us”.

“It [financial instrument] will help leverage the capital markets to fund the compensation without adding debt to Zimbabwe,”  he said.

Zimbabwe has set up three working groups on economic reforms, governance reforms and land tenure reforms, compensation of former farm owners and the resolution of BIPPAs.

Zimbabwe is battling to clear close to US$14bn foreign debt as of September 2022, according to official data from the Ministry of Finance and Economic Development.

Of this amount, US$6.3bn are arrears.

Zimbabwe owes US$1.48bn to the World Bank, AfDB (US$671m), the European Investment Bank (US$372m) while the Paris Club and non-Paris Club are owed US$3.55bn and US$2.22bn respectively.

The balance is owed to bilateral creditors, multilateral creditors, blocked funds, Treasury bonds and other creditors.

Zimbabwe’s failure to clear arrears has resulted in the country failing to unlock fresh capital from international funders for more than two decades.

Joaquim Chissano, high level facilitator to the debt resolution process process, exhorted Zimbabwe to implement commitments made in the matrices. He said it was a process that required determination on the part of Zimbabwe.

“In the process of implementing, there are some low hanging fruits to harvest. For instance I refer to the conduct of free and fair elections, the 99-year leases, compensation of former commercial farmers under the Global Compensation Deed, resolution of farms under BIPPAs as well as an SMP [Staff Monitored Programme] to anchor macroeconomic reforms,” Chissano said.

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