Zimbabwe: Time Bank Offers to Finance Former Farmers' Compensation

14 October 2021

Time Bank Zimbabwe Limited that is set to re-open its doors to the public on December 01 this year, has excited the market after unveiling four types of loan facilities among them a scheme for payment of compensation to white former farmers.

The latest development by the indigenously owned financial institution is likely to revolutionise banking in the country and on the African continent.

In a statement, the bank revealed that it is in the process of seeking the requisite approvals before rolling out some of the facilities, while underlining that it will not be taking deposits from the public, until further notice.

Of the four facilities which all demonstrate the institution's eye for untapped opportunities, the major one is aimed at providing Government with a loan facility from which previous farm owners (PFOs) could be paid their compensation.

"The purpose of the facility is to finance the payment of compensations by Government to PFOs who are covered by the Global Compensation Deed. The compensation amount will be paid through Time Bank by Government to the PFO and Time Bank will pay such compensation amount in United States dollars, cash or bank transfer.

"Interested PFOs will be required to submit application forms to Time Bank for payment. The maximum payment amount is US$10 000 per PFO, at any given time. Additional amounts will be given in due course. A letter of confirmation from Government is required which confirms that the Government will repay the loan amount to Time Bank," reads part of the statement.

In July 2020, Government committed to pay US$3,5 billion as compensation to former white commercial farmers, numbering about 4 000, through the Global Compensation Deed.

Government has, however, struggled to pay the US$3,5 billion, with Treasury indicating in June this year that only $53 million has so far been paid to 737 PFOs.

Time Bank's facility, which is a unique form of public-private partnerships, is therefore seen easing pressure on Government by providing a solution that would see the PFOs getting their dues, about 20 years after they were pushed off the properties as part of the land reform programmes.

The other three facilities are meant to finance small and medium scale exporters, provide mortgage loans to those with access to foreign currency as well as enabling Government to pay compensation to other groups of Zimbabweans who deserve such.

In terms of the latter, the bank has submitted a proposal to the Ministry of Finance and Economic Development for approval.

While it did not highlight which categories of people would be entitled for compensation, this could assist other deserving cases.

With regards the exporters' facility, the maximum amount for the loans has been capped at US$10 000, at an interest rate to be negotiated.

"Loan amount can be increased on subsequent export loans, depending on performance. The purpose of the loan is to provide pre and post export trade finance through loans, international debt factoring facilities, letters of credit, bills of exchange, performance guarantees, and other trade finance facilities," said Time Bank.

At a time when the country is struggling to generate enough foreign currency receipts to meet its import requirements, the facility could come as a game-changer for the export sector.

As for the mortgage loans, these will also be available in foreign currency on soft terms covering both locals who are resident in Zimbabwe or in the diaspora, as long as they have lawful access to foreign currency.

The loans, whose interest would be negotiated, will cover the full purchase price for housing schemes or properties approved by Time Bank.

"The above-mentioned loan facilities are pilot loan facilities. Thereafter, Time Bank intends to arrange much bigger loan facilities for exporters, mortgage loan borrowers and for payment of compensation to previous farm owners under the Global Compensation Deed with government.

"The facilities will be available after December 1, 2021 and also after approvals by the Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development. In the meantime, Time Bank will seek such approvals," said the Bank.

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