Cash-strapped Government of Zimbabwe has appointed United Kingdom based financial advisors, Newstate Partners, to assist in raising US$3.5bn required to compensate former commercial white farmers, whose assets were expropriated by the State during the land reform programme, a cabinet minister has said.
Newstate Partners has acted as financial advisors to more than 30 governments across the world.
Finance and Economic Development Minister, Mthuli Ncube said Newstate Partners, was appointed as financial advisors, in terms of the Global Compensation Agreement.
At least 4 000 white farmers were forcibly evicted from farms during Zimbabwe’s land redistribution programme at the turn of the century.
Ncube said the financial advisors have already started work.
”In compliance with the Public Procurement and Disposal of Public Service Act , the procurement of financial advisors for the joint resource mobilisation process began with issuance through the Ministry of Finance and Economic Development, of an expressions of interest in September 2020.
”The procurement process went through several stages which took longer than already been originally anticipated. Nevertheless, we are pleased to advise that the process has now been completed and the contract with the financial advisors, Newstate Partners ,was signed on 21 April 2021. The financial advisors have already commenced work with the Joint Resource Mobilisation Committeee (JRMC) supporting its capital raising efforts.” Ncube said.
While President Emmerson Mnangagwa’s administration tabled a US$3.5bn offer to the former commercial white farmers, the first instalment of US$1.75bn was supposed to be paid this month. The balance would be paid in instalments of US$437.5m per year for the next five years.
However, the July 2020 deadline was rolled over to July next year after government indicated it has failed to raise the initial US$1.75bn to pay the farmers.
Mthuli Nuce said the government, working with the financial advisors, would issue bonds in both domestic and international markets, listed and unlisted equity instruments, structured financial arrangements including the issuance of asset-backed securities, and off-balance sheet financial arrangements using commercial guarantees.
The financing instruments and funding mentioned above are expected to augment and complement the resources that have already been made available by the government . The administration has committed ZWL$1bn towards the compensation of farmers.
This would be in addition to the US$250m government secured towards the compensation process through the donation of a shareholding value in Kuvimba Mining House.
As was first reported by Business Times last month, Ncube confirmed that government and the representatives of the former commercial white farmers, signed a new deal to postpone the payment date of the first instalment of US$1.75bn from end of this month to July next year.
”The longer than had been anticipated period for the appointment of the financial advisors and the Covid 19 pandemic slowed down the resource mobilisation process.
”The Parties to the Global Compensation Deed, therefore agreed to extend the period of the first payment from July 31,2021 to July 31, 2022,” Ncube said.
The compensation offered to former farm owners by government 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 according to various analysts.
Analysts said honoring the deal could see them lifting the sanctions on the southern African country, which was once the breadbasket of the region.
The compensation agreement is expected to bring closure to the emotive issue which speaks to property rights and the restoration of trust between former farm owners and the government.