ZIMBABWE’S cash-strapped government has deferred the payment of US$1.75 billion in compensation to white former commercial farmers who lost land during the country’s controversial agrarian reform programme after failing to raise the required funds.
Finance minister Mthuli Ncube has said the government would make payments mid-year after missing the initial date, but government officials insist there is no money to pay.
Two years ago, the southern African nation agreed to pay US$3.5 billion in compensation to white farmers whose land was expropriated by the government to resettle black families, moving a step closer to resolving one the most divisive policies during long-time leader Robert Mugabe’s era. At the time, Treasury hoped that half of the amount would have been paid by mid-2021.
According to the compensation agreement between farmers and the government, Zimbabwe, which is barely recovering from two years of economic contraction, does not have the money and will issue long-term bonds and jointly approach international donors with the farmers to raise funding.
Ncube, who was showcasing Zimbabwe as a preferred investment destination at the ongoing Dubai Expo, told potential investors that the economy is experiencing a strong rebound, with the International Monetary Fund (IMF) estimating growth at 6.3% during 2021 underpinned by growth in agriculture, mining, construction and manufacturing sectors.
However, the IMF estimates growth to moderate to 3% during 2022, on account of risks from the Covid-19 pandemic and vulnerability to climate and other exogenous shocks.
“Government has commenced payments under the Global Compensation Deed, while the interim target for making half of the US$3.5 billion total has been extended to July 2022,” the Finance minister said.
Initially, the government had set a target of June 2021.
At the turn of the millennium, Mugabe’s government carried out often violent evictions of 4 500 white farmers and redistributed large tracts of land to nearly 300 000 natives, arguing it was redressing colonial land imbalances.
The agreement, which was signed in the capital Harare, showed that white farmers would be compensated for infrastructure on the farms and not the land itself, as per the national constitution.
Under the compensation agreement, the government made a commitment to re-pay ex-commercial farmers for improvements undertaken on the land before losing it under the land reform programme.
Last year, Treasury announced the appointment of United Kingdom-based Newstate Partners as financial advisers to the agreement with effect from April 2021.
According to Ncube, the financial advisers have already commenced work with the Joint Resource Mobilisation Committee supporting its capital-raising efforts.
Ncube then said the Newstate Partners had tabled funding options that include bonds issued domestically (both listed and unlisted), bonds issued into international markets (both listed and unlisted); and listed and unlisted equity and quasi type instruments.
The former commercial farmers last June received their first pay cheque of US$1 million in the form of a dividend for the 12.5% equity the government gave them in Kuvimba Mining House which they described as a only a tiny fraction of the finances required to pay off the full compensation amount.