LIVINGSTONE MARUFU
Government this week said it is finalising various instruments to pay former farm owners in what observers said is a test on the sincerity of the President Emmerson Mnangagwa administration in compensating those that lost the land during the land reform exercise.
In 2020, the government tabled the US$3.5bn offer to the former farmers as compensation for assets expropriated during the fast-track land reform exercise but has defaulted thereby raising questions on its sincerity to settle the obligation.
Finance and Economic Development minister Mthuli Ncube told Business Times that the government will not default again as long-term plans are in place to pay the farmers.
“We are preparing some instruments for the compensation of former commercial farmers. We are crossing some T’s and dotting some I’s but we are finalising issuing some instruments,” Ncube said.
“We are expecting to make the payments once we have signed off these instruments,” he added, insisting the government was ready.
“We have made very good progress and I am very pleased with it.”
Ncube said the compensation processes started a long time ago and the government was now only formalising the processes.
The former commercial white farmers are assessing a new proposal tabled by the government and said they were still consulting and will come up with a consolidated position.
Two months ago, Ncube came up with a plan to settle 10% of the full amount — US$350m — over the next four years and thereafter issue a bond in year six at a minimum coupon rate of 10%.
“We are finalising our response to the government which we will submit once we finish the processes,” the Commercial Farmers Union president, Andrew Pascoe, recently told Business Times.
The US$3.5bn offer to the former farmers was in addition to the interim relief compensation being paid to 800 destitute white farmers.
The parties to the agreement are the government through the Finance Ministry, the Commercial Farmers Union, the Southern African Commercial Farmers Unions, and Valuation Consortium.
Of that amount, US$1.75bn was 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 the government defaulted.
Ncube then proposed a 20-year bond deal, which was rejected by the farmers due to its longevity.
CFU legal representation will submit the document to the government and discuss a way forward which they will advise the farmers.
Pascoe said former farmers now want quick payments which do not consume more time due to the age of most farmers.
It is understood that the government through its international advisors, NewState Partners, will also pursue an arrangement with IATA to put a levy on international tickets into Zimbabwe with the hope that such a levy will raise US$200m for the country.
The guaranteed cash flows will then be used to raise an instrument for US$2bn.
Treasury bonds will then be issued in year six depending on the outcome of the initiatives.
Former farm owners believe that a cash payment could be a game changer as it changes farmers’ perspective on the government’s commitment to the deal.
Pascoe said there should be a guarantee to protect their agreements to avoid “merry-go-rounds” that have been happening over the years.
He said former farm owners now want concessions from the government which will safeguard the guarantees that the farmers are asking for.
He said some of the farmers will not be around in 2042 as some are 85 and 90 years old.
