Govt earmarks US$55m for compensation
Government has earmarked US$55 million for the compensation of white former commercial farmers in 2024 for improvements on land it acquired to resettle the landless black majority at the turn of the millennium.
Clearing the debt of US$3,5 billion, which is part of Zimbabwe’s cumulative sovereign debt stock of US$17,7 billion, is critical to the Government’s ongoing efforts to engage and re-engage global partners.
In the 2024 National Budget Statement, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube reiterated the willingness to compensate former farmers for the land improvements in the coming year.
“In line with the Roadmap of the Arrears Clearance and Debt Resolution process, Government made an allocation of US$55 million in the 2024 National Budget for compensation of former farm owners (for land improvements),” the minister said.
Of the amount, US$35 million will be earmarked for (land improvements on) farms under the Global Compensation Deed, while US$20 million is compensation for (land improvements on) farms that were protected by Resolution of Bilateral Investment Protection and Promotion Agreements (BIPPAs), which were affected by the land reform programme.
This comes after the Government in December 2022, came up with the Structured Dialogue Platform (SDP) with all creditors and development partners, to institutionalise dialogue on economic and governance reforms that will pave the way for the country’s arrears clearance and debt resolution process.
The process is being led by the President of the African Development Bank (AfDB), Dr Akinumwi Adesina, and former President of Mozambique, Joaquim Chissano who is the high-level facilitator.
“In US dollar terms, total public and publicly guaranteed debt amounted to US$17,7 billion ($96,71 trillion), as at end September 2023, of which external debt amounted to US$12,7 billion ($69,36 trillion) and domestic debt of US$5 billion ($27,4 trillion),” Minister Ncube added.
Domestic debt comprises Government securities of $8 trillion, domestic arrears to service providers of $172 billion and compensation of former farm owners for improvements on the acquired land amounting to $19,1 trillion.
Economist Tinevimbo Shava believes compensating former farmers for the improvements on the land acquired by the Government to resettle the black majority was a pivotal step toward economic rejuvenation.
“This initiative not only rectifies previous problems but also promotes agricultural stability, encouraging skilled individuals to re-engage in farming,” he said.
According to Mr Shava, this gives investors confidence that the country is truly willing to resolve property rights problems and that their investments will be protected by the same.
“The ripple effect includes increased food production, job creation, and heightened investor confidence in the country’s commitment to property rights,” Mr Shava added.
Additionally, the debt clearance demonstrates fiscal responsibility, bolstering Zimbabwe’s creditworthiness. This, in turn, facilitates access to low-cost funding in the international financial markets and can help unlock opportunities for economic expansion.
Mr Shava concluded that overall, these actions not only address past grievances but also position Zimbabwe on a trajectory towards sustainable growth, improved global relations, and a more robust and resilient economy.
The US$3,5 billion compensation is for the land improvements acquired for redistribution, biological assets, and land clearing costs for the land compulsorily acquired for resettlement.
In 2020 an agreement was signed among key parties namely Minister Ncube, 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 represented the interests of white 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 CFU or SACFA.