…As Govt fails to raise US$1.75bn
CASH-STRAPPED Zimbabwe will miss the July deadline to pay US$1.75bn in compensation to dispossessed white commercial farmers amid revelations the administration has failed to get financial support from development partners and international financiers, it emerged this week.
Last year, President Emmerson Mnangagwa’s government tabled a US$3.5bn offer to white former commercial farmers for assets expropriated by the State.
Of that, US$1.75bn was supposed to be paid in July while the balance would be paid in installments of US$437.5m per year for the next four years.
Commercial Farmers Union of Zimbabwe (CFU) president, Andrew Pascoe, this week told Business Times that the government has indicated that it was not in a position to make the promised US$1.75bn by July and an amendment on the agreement was on the cards.
“We have agreed to postpone the first payment scheduled for July and we haven’t yet officially signed the amendment that needs to be in place,” Pascoe told Business Times this week.
“We expect to sign the amendment next week or so.”
At least 4 000 white farmers were forcibly evicted from farms during the land redistribution programme in the early 2000s.
All efforts to get a comment from Finance and Economic Development Minister, Mthuli Ncube, and permanent secretary, George Guvamatanga, were futile.
Their mobile numbers continuously went unanswered.
Business Times called the ministry’s fixed lines several times. But Ncube and Guvamatanga were said to be in meetings.
Analysts say 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.
The analysts said honouring the deal could see them lifting the sanctions on the southern African country, which was once the bread basket of the region.
Asked if the deal was still on track, Lands, Agriculture, Water, Fisheries and Rural Settlement minister, Anxious Masuka referred all the enquiries to the ministry’s permanent secretary, John Basera.
Basera, however, said enquiries should be directed to Major General (Retired) Godfrey Chanakira, the chairperson of the resource mobilisation committee.
Enquiries were sent to Chanakira on Monday this week. However, he referred this publication to the Ministry of Finance and Economic Development.
But no comment could be obtained from Ncube and Guvamatanga.
Several economists told Business Times that Zimbabwe, which is in arrears with international financial institutions, would find it difficult to meet its commitment.
“The country was hoping that donations were going to help them to compensate the former commercial farmers but the donations were not forthcoming and that has caused panic within the government,” economist John Robertson said.
“Even if they move the date to next year, the country would not have raised the first payment as the economy continues to grapple with forex challenges.”
Robertson said Zimbabwe crippled itself by making commitments it cannot make as it is “languishing in debt and is failing to capacitate farmers, manufacturers and miners”.
Now that the government has failed to honour its commitment several analysts said the breach will tear into shreds President Mnangagwa’s promise to protect investments under his “Zimbabwe is open for business” mantra.
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.
In October 2015, Zimbabwe sought the annulment of the award but lost.
The compensation agreement is expected to 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.