Zim approves US$500m farmer compensation claims

THE Government of Zimbabwe has approved 538 compensation claims worth nearly US$500 million from white former landowners and those whose farmland was covered by Bilateral Investment Protection Agreements, in a significant step expected to put the country on a firmer footing to resolve its debt and arrears.

Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, revealed this in the 2024 National Debt Report released last week.

Compensation has been listed as one of the conditions necessary to resolve the country’s debt and arrears, now amounting to about US$21,1 billion in total. Of that amount, US$12,3 billion is external debt, while US$8,7 billion is domestic debt. Of the domestic debt, US$3, 5 billion is for compensation of former farm owners.

Zimbabwe embarked on the land reform programme in 1999, which saw vast swathes of arable land formerly owned by about 5 000 white farmers being redistributed to indigenous Zimbabweans.

The fast-track land programme also saw some farms protected by BIPPAs also being affected.

The Government entered into an agreement with the former commercial farmers in April 2021 to pay US$3,5 billion under the deal known as the Global Compensation Deed (GCD).

Under the original agreement, the farmers would have received half of the money within the first year, followed by four US$437,5 million annual instalments.

The agreement was signed by the Government and two unions representing former white farmers — Commercial Farmers Union (CFU) and the Southern African Commercial Farmers Alliance.

However, the Government faced some challenges in securing the anticipated funding from global partners, leading to delays in fulfilling its compensation promises.

Figures from the Treasury show that the compensation committee in August and September 2024 approved 444 applications for compensation, amounting to US$331,7 million.

In line with the revised GCD payment offer, the Treasury will make payments amounting to US$3,3 million representing 1 percent of the capital amount.

The balance, after netting off US$3,3 million and interim relief payments paid to each of the 444 approved applications, will be settled through issuance of US dollar denominated Treasury bonds with maturities ranging between one and 10 years and a coupon of 2 percent.

Compensation payments for the approved applications were expected to commence during the last quarter of 2024.

The Treasury has also allocated US$10 million in the 2025 budget for the compensation of the former farmers under the GCD.

The compensation committee has approved a total of 94 claims amounting to US$131,3 million from various countries that had BIPPAs ratified before Zimbabwe’s land reform programme.

The majority of the claims, 46, came from the Netherlands, followed by Switzerland with 27, Germany with 14, Denmark with six, and Yugoslavia with one.

“In line with the agreed payment arrangement, with the Sector Working Group (on Land Tenure Reforms under the structured dialogue on debt and arrears strategy), the US$20 million allocated in the 2024 budget is going to be shared equally among the 94 ratified BIPPA protected farms approved by the compensation committee.

“Payment of the US$20 million to the 94 approved applications is expected to be made before the end of 2024. The payment of the balance will be through a multi-year plan, where Treasury will allocate resources in each national budget for the next four years,” said the Treasury.

An official with Commercial Farmers Union expressed gratitude for the recent compensation efforts, acknowledging the significant step forward.

However, the official raised concern that the process may be too late for some farmers who have already passed away or can no longer be contacted.

Additionally, the farmer noted that the use of long-term instruments for payment may not be ideal for those who are elderly or those who require immediate financial assistance.

“Ever since this compensations process, this time has demonstrated a significant step, although this might be too late for others who had already given up and cannot be located, and those aging, because some of the money is paid through the issuance of long-term instruments,” said the official, who spoke on condition of anonymity for fear of violating protocols.

Last year, President Mnangagwa acknowledged that the Government might only be able to fully compensate white farmers over “generations.”

At a recent high-level structured dialogue meeting on debt and arrears clearance strategy in Harare, the working group on land tenure noted significant progress had been made on land tenure and farm compensation.

The Government, in October 2024, made a decision to give security of tenure to all beneficiaries of the Land Reform Programme, in line with Section 292 of the Constitution and the National Development Strategy 1 objectives of providing security of tenure for agricultural land, in order to increase productivity and investment in the agriculture sector.

All land held by beneficiaries of the Land Reform Programme under the 99-year lease, offer letters, and permits will now be held under a bankable, registrable and transferable tenure document, to be issued by Government to beneficiaries.

Debt relief hopes as reforms accelerate

In 2022, President Mnangagwa appointed the AfDB president, Dr Akinwumi Adesina and former Mozambican president Joachim Chissano, to champion the country’s arrears clearance and debt resolution process.

Key stakeholders in the dialogue process have said Zimbabwe is walking the talk in terms of the reforms meant to resolve the debt and arrears with notable progress having been made under the working groups formed under the dialogue process to oversee reforms in sectors of economic growth and stability and governance.

“We have made more progress in two years than all the prior 21 years since the sanctions were imposed,” African Development Bank president, Dr Adesina said. “The high-level structured dialogue is the only way, there is no other way.”

Dr Adesina also pointed out that 23 years of sanctions had “left Zimbabwe with a pile of debt which has risen to $21 billion – $13 billion for external debt and $8 billion of domestic debt. Even wars never last this long.”

“We all agree we must play our part to correct this anomaly and give a new lease of life to this nation and its people, so Zimbabwe can run again,” Dr Adesina stressed.

“Run, to build first rate schools. Run, to build infrastructure, from transport corridors, railways and power transmission lines that will integrate the SADC region and boost economic growth and jobs. Zimbabwe is too critical for the world to ignore.”

Economic professor, Gift Mugano, argued that Zimbabwe should demonstrate good will by avoiding accumulating more debt, particularly domestic debt, during the period it is being assisted to clear its debt and arrears.

In a radio programme with Star FM host, Linda Muriro, a fortnight ago, Prof Mugano expressed concern over the US$2 billion debt the country acquired in the year, saying the accumulation of additional debt may undermine the structured dialogue process.

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