Zimbabwe is on the hunt for international financial advisors to raise US$3.5bn from the international markets as it quickens the pace to compensate former farm owners who lost land during the controversial land reform programme.
In July, the government and former farmers signed a Global Compensation Deed in which US$3.5bn would be paid to former farm owners as compensation for value of improvements, biological assets, and land clearing costs for the land which was compulsorily acquired for resettlement.
The compensation of the former 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, according to the Global Compensation Deed signed on July 29.
In a notice issued Friday, the Ministry of Finance and Economic Development said financial advisors have up to October 22 to submit their expression of interest.
It said interested consulting firms should provide information demonstrating that they have the required experience, competencies, skills, and qualifications relevant for the performance of the services whether as individual firms, joint ventures, or as consortia.
The firms should be registered, submit a minimum of three trade references, a minimum of 10 years of experience for each individual consulting firm singularly or in the consortium or joint venture, and evidence of the availability of the necessary project team to undertake the project.
The ministry said the evaluation criteria, drawing up of the short-list and selection procedure shall be in accordance with Zimbabwe’s Public Procurement and Disposal of Assets Act [Chapter 22:23].
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 the Compensation Deed, 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.
The 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 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.