Government could miss payment of the initial US$1.75bn compensation installment due in July this year to ex-farmers that lost land during the land reform programme amid revelations the administration has failed to raise the required amount, Business Times can report.
Two years ago, the government tabled a US$3.5bn offer to former commercial white farmers for assets expropriated by the State during the land reform programme done more than 20 years ago to empower landless majority.
Of that amount, US$1.75bn is supposed to be paid in July this year while the balance would be paid in installments of US$437.5m per year for the next four years.
But, multiple government sources told Business Times that the administration has failed to secure funds from the targeted development partners and international financiers.
“We are fast approaching the July global land compensation deadline and there is no significant communication as to what the government has done to raise the US$1.75bn.
“The land compensation deal was going to be a true test of whether it is a reformed government or the same old regime that does not have international credibility ratings as it does not have respect for property rights.
“It is a make or break deal for the administration as deals of such magnitude have international attraction and failure to honour them will be a blow for Zimbabwe for many years to come,” one top government official who requested anonymity told Business Times.
Commercial Farmers Union president Andrew Pascoe said the government was mum on the matter.
“We are yet to get communication from the government side [as far as the compensation is concerned] and I don’t have much to say on the issue,” he said.
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.
The government has made an interim relief payment of US$1m to ex-farmers who are struggling to make the ends meet.
At least 4 000 white farmers were forcibly evicted from farms during the land redistribution programme in the early 2000s.
The compensation is for value of improvements, biological assets and land clearing costs for the land which was compulsorily acquired for resettlement.
Analysts said the offer was critically important as it marked an important step to end Zimbabwe’s costly two-decade isolation by powerful western nations that imposed economic sanctions on the country after the land reform programme.
They said honouring the deal could see them lifting the sanctions on the southern African country, which was once the bread basket of the region.
Economists told Business Times that Zimbabwe, which is in arrears with international financial institutions, would find it difficult to meet its commitment.
The government set up a joint resource mobilisation committee to work with the Ministry of Finance and Economic Development to raise funds for payment of the global compensation figure.
The land compensation deal was signed by Ncube, CFU representative Pascoe, 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 while 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 government wanted to issue a long term debt instrument in international capital markets, to mature after 30 years, the compensation document said.
The land dispute has been haunting 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 Zimbabwean government was to pay the family US$195m in damages.
The compensation agreement is expected to bring closure to the emotive issue which speaks to property rights.
Experts say Zimbabwe has no capacity to pay following the economic ramifications arising from the Russia-Ukraine conflict.
The conflict has triggered global supply constraints thereby pushing up the prices of fuel and edible oils.
This triggered an increase in prices on the domestic market with the government being forced to cut taxes on fuel to cushion motorists. Taxes are the government main source of funding as it cannot borrow from international financial institutions due to a debt overhang.