…Want land back
Zimbabwe’s US$3.5bn land compensation deal is off balance amid indications that a section of former commercial white farmers have tabled new demands including getting back their land expropriated by the government under the land reform programme more than 20 years ago, Business Times can report.
The latest developments come after the government conceded that it has no capacity to pay the initial US$1.75bn by the end of July this year.
Potential international financiers have also demanded that the government should securitise its vast minerals, as Zimbabwe has been struggling to pay debts owed to international lenders.
Multiple sources told Business Times that the deal is now in limbo as farmers are now demanding their land back, although amendments for a new deal had been agreed between the government and the farmers.
They view the delay by the government to compensate former commercial farmers as a breach of the compensation deal.
“There are some divisions within the former commercial farmers’ camp as a considerable number of farmers want their land back rather than financial compensation while others want monetary compensation as they have already found somewhere to farm hence need that money as capital for their projects.
And the other challenge is that the international financiers are threatening to dump the deal after the government failed to give concrete answers on the repayment of the new debt,” a source told Business Times.
“As a result, international financiers want the government to securitise its minerals to fund the deal, a pact which the government is not willing to commit to.”
Commercial Farmers Union president Andrew Pascoe told Business Times: “We want to get back to our members at the weekend where we will give them the amended documents but currently we are engaging the authorities on some issues which we think should be addressed.”
In March this year, the cash-strapped government announced it was not in a position to make the first payment of US$1.75bn by July to the former commercial white farmers.
The compensation of former commercial farmers was seen as the first step of the reengagement exercise where Zimbabwe could show the world that it respects property rights and with that, external funding was going to be possible.
Under the agreement signed at the State House in July last year, Zimbabwe agreed to pay US$3.5bn as compensation.
The compensation is for value of improvements, biological assets and land clearing costs for the land which was compulsorily acquired for resettlement.
The first batch of US$1.75bn was supposed to be paid by July and the balance will be paid in four-year equal installments of US$437.5m per year.
Zimbabwe had planned to raise the amount by issuing a bond in the international capital markets and this has not happened as the government is failing to raise foreign currency for its economy to cut the import bill.
The parties to the agreement had set up a joint resource mobilisation committee to work together with the Ministry of Finance and Economic Development to raise funds for payment of the global compensation figure.
Last year’s agreement was signed by Finance minister Mthuli Ncube (representing Zimbabwe), Pascoe (representing CFU), South African Commercial Farmers Alliance (SAFCA) representative Cedric Robert Wilde and Anthony Nield Purkis representing Valuation Consortium (Private) Limited (VALCON).
The CFU represents the interests of commercial farmers operating in Zimbabwe, SACFA the interests of commercial farmers in Matabeleland and Valcon the interests of all commercial farmers registered with them, some of whom are not members of either the CFU or the SACFA.
The compensation of the former commercial white farmers will see Zimbabwe issuing a long term debt instrument of 30 years’ maturity in international capital markets in compliance with the country’s debt management strategy and consistent with its key debt sustainability indicators, the document said.
The land dispute has haunted the government.
In 2018, a World Bank-affiliated international appeals court – the International Centre for Settlement of Investment Disputes (ICSID) -dismissed Zimbabwe’s application to annul an award granted to a former commercial white farmer.
The ICSID had in July 2015 awarded the Bernhard von Pezold family the return of their property in Manicaland Province plus their full legal costs and interest, or alternatively the Zimbabwe government should pay the family US$195m in damages.
In October 2015, Zimbabwe sought the annulment of the award but lost.
The compensation agreement could bring closure to the emotive issue which speaks to property rights.
Resettled farmers have struggled to access financing from banks who continue to shun 99-year leases as not bankable, thereby affecting production on the farms.
Economists said the country crippled itself by making commitments it cannot fulfill as it is “languishing in debt, has a high import bill and is failing to capacitate farmers, manufacturers and miners”.
Efforts to get a comment from Finance minister, Mthuli Ncube, and permanent secretary, George Guvamatanga, were futile.
Their mobile numbers were not picked when this publication called yesterday.