Ndamu Sandu/Livingstone Marufu
Zimbabwe will issue a long term debt in international capital markets to raise US$3.5bn as compensation to former commercial white farmers for the loss of land, 20 years after the government embarked on the fast track land reform programme to resettle locals.
The compensation is for value of improvements, biological assets and land clearing costs for the land which was compulsorily acquired for resettlement.
Government’s failure to compensate former commercial white farmers had been cited as a breach of property rights tearing into shreds President Emmerson Mnangagwa’s commitment to protect investments under his “Zimbabwe is open for business” mantra.
According to an agreement signed yesterday at State House, half of the amount (US$1.75bn) as deposit is payable 12 months after signature of the agreement. The balance will be paid in four year installments of US$437,500,000.
“The full amount of the global compensation figure may, however, be paid within 12 months of signature of the agreement if sufficient funds for the purpose are mobilised within this period,” the document reads.
The parties to the agreement will 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.
Yesterday’s agreement was signed by Finance minister Mthuli Ncube (representing Zimbabwe), Commercial Farmers Union of Zimbabwe (CFU) representative John 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, 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 Zimbabwean 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 however said Zimbabwe, which is in arrears with international financial institutions, will struggle to compensate the farmers.
“The government can only compensate the former white commercial farmers if they can get it somewhere else because they are bankrupt,” said Harare-based economist John Robertson.
“Also the money will be subjected to abuse so the foreign government or bank is likely to directly pay the farmers not to pass it through the government as the money will never be seen again.”
Another economist Phineas Kadenge said the signing ceremony came as a surprise for many as the southern African nation battles to contain rising cases of Covid-19 and political tensions.
“I don’t have enough background for the signing ceremony but given the fighting (coronavirus) we are in the timing is a bit misplaced there. We just hope it’s not another signing ceremony which doesn’t bring any results,” Kadenge said.