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Oliver Kazunga Senior Business Reporter

THE African Development Bank (AfDB) says it is working with the Government on designing innovative financial instruments to frontload the mobilisation of US$3,5 billion that Zimbabwe needs to pay off the debt to white former commercial farmers for improvements on farms acquired under the land reform programme.

Through the Global Compensation Deed (GCD), signed in 2020, the Government made a commitment to clear the debt to farmers for improvements on the farmlands acquired just over two decades ago.

The US$3,5 billion owed to white former commercial farmers is part of a large external debt, about US$14 billion, owed to multilateral, and bilateral partners that include the AfDB, World Bank, and the Paris Club.

To operationalise the debt clearance strategy, President Mnangagwa appointed AfDB president Dr Akinumwi Adesina to champion Zimbabwe’s arrears clearance and debt resolution process.

Dr Adesina is working together with former Mozambican President Joaquim Chissano whom President Mnangagwa also appointed high-level facilitator for the dialogue process between the Government and international creditors.

The AfDB president told the Fourth Structured Dialogue Platform on Zimbabwe’s arrears clearance and debt resolution process on Monday that clearing the debt to the farmers was a matter of priority for Zimbabwe.

“We need a greater sense of urgency on this issue. That is why the African Development Bank is currently working with the Government of Zimbabwe to develop innovative financial instruments and structures that can be used to front-load the mobilisation of the US$3,5 billion for compensations.

“I encourage development partners to work together on this proposed structure, which can help leverage capital markets to fund the compensations without additional debt for Zimbabwe.”

He said the Government had taken the decision to make land titles available to enhance the security of commercial farmland, which would come in the form of 99-year leases which should be bankable and transferable.

Dr Adesina said, as AfDB president, he was concerned about Zimbabwe’s debt situation and the continued debt accumulation from arrears that keep piling.

He said Zimbabwe could not run up the hill of economic recovery carrying a backpack of debt on its back hence the need for a comprehensive debt arrears clearance and debt resolution.

“But getting there is not a walk in the park. We must address history, to make history.

“Together with Mozambique former President Joachim Chissano, the facilitator of the high-level dialogues, we have been working closely with you, the Government of Zimbabwe, development partners, private sector, and civil society to find a solution path to the normalisation of economic and financial engagement of Zimbabwe with the international community.

“The people of Zimbabwe have suffered enough. It is time for action to solve the problems of the past to clear the way for the future.

“Over the past 18 months, we have institutionalised a platform for regular, constructive, and open dialogue that is key for trust and confidence building among all stakeholders. The issues are not just economic or financial.

“They also involve governance, rule of law, human rights, freedom of speech, level political playing field, electoral reforms that will assure free and fair elections; as well as fairness, equity and justice for the commercial farmers and other businesses who were dispossessed of their lands, for which there is a clear need for restitution and compensation.

“This will also include improving the overall business environment to attract greater private investments in line with the ‘Zimbabwe is open for business’ mantra”.

Dr Adesina said the three sector working groups (economic, governance; land tenure reforms, compensation under the GCD and the Bilateral Investment Promotion and Protection Agreements (BIPPAs) had comprehensively discussed these issues over the past four high-level dialogues.

Against this background, he said, there was a strong and measurable commitment by the Government to economic and fiscal policy reforms.

“The International Monetary Fund (IMF) Article IV mission in December 2022 was successful and was approved by the board of the IMF.

“The Government has taken the decision to eliminate multiple exchange rates, introduce an enhanced foreign exchange auction market, transfer outstanding debt of the Reserve Bank of Zimbabwe to the Treasury for greater transparency, avoid off-budget financing; and end the quasi-fiscal activities of the Reserve Bank of Zimbabwe.

“It has also taken decisions to end subsidies and reform state-owned enterprises. Also, the establishment of the liquidity management committee is a proactive measure that will promote effective co-ordination between fiscal and monetary policies,” said Dr Adesina.

He expressed pleasure that development partners had worked closely with the Government in identifying and selecting globally acceptable indicators to measure progress on governance reforms.

This, Dr Adesina said, reflected how transparent and inclusive the structured high-level dialogues were in helping to build mutual trust, confidence and accountability.

“On land reforms and compensation, agreements were reached in the sector working group and the high-level dialogue on the Government’s decision to pay US$3,5 billion to former commercial farmers under the Global Compensation Deed, and to fast-track the implementation of the Bilateral Investment Promotion and Protection Agreements (BIPPAs).”

President Chissano said Zimbabwe was grappling with macro-economic instability and debt distress.

“The crisis in the country is having terrible consequences for the region, as Zimbabwe lies at the heart of Southern Africa. Many regional infrastructure development plans, including roads, railways, and power transmission lines have been brought to a standstill, as they have to run through the country.

“Bringing Zimbabwe back to the concert of nations is critical for the country, the region and the continent,” he said.

President Chissano added that the Government understood these critical imperatives hence President Mnangagwa’s decision to seek global re-engagement with the international community through the structured dialogue.

He noted the dialogue had registered tremendous progress under a Government-owned process, which had a set of matrices outlining several key reforms.

In a communiqué after the forum, Finance and Economic Development Minister Professor Mthuli Ncube said since 2018, the Government had been implementing key economic and governance reforms to meet its development objectives.

He said the initiatives included reforms on economic growth and stability, governance, and land tenure related to compensation of former farm owners and resolution of differences for acquired properties covered by BIPPAs.

“In 2020, the Governments signed the Global Compensation Deed (GCD) with former farm owners for US$3,5 billion as compensation for farm improvements on the farms acquired on the land reform programme.

“Compensation of acquired farms under Bilateral Protection and Promotion Agreements (BIPPAs), which are not part of the GCD, is being considered on a case-by-case basis and bilateral dialogue has begun.

“In December 2021, the Government adopted the arrears clearance and debt relief restructuring strategy to help resolve the country’s long outstanding debt overhang which is weighing heavily on the country’s development agenda.”

“In this regard, the Government in December 2022 established a structured dialogue with all its creditors and development partners, three sector working groups were established on economic reforms, governance reforms and then land tenure reforms compensation of former farmers and resolution of BIPPAs.

“Since December 2022, the sector working groups have been working diligently on the reforms on reform matrices to underpin the arrears clearance and debt resolution process.

“Sector working groups included representatives from the Government, international creditors’ representatives represented by Ambassadors in Harare, civic society organisations and the private sector.

“The Government also applauds its creditors and development partners for their unwavering strong support for the arrears clearance and debt resolution process.

“The Government is pleased that through these sector working groups it has managed to successfully institutionalise regular constructive open dialogue and build trust and confidence among all stakeholders,” said Prof Ncube.