Martin Kadzere — Senior Business Reporter
ZIMBABWE has started compensating white former commercial farmers whose land was acquired under the Land Reform Programme, marking a significant milestone towards resolving this long-standing issue and further opening pathways for the country's arrears clearance and debt resolution.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube announced that the Government had issued US$307.9 million in Treasury bonds and disbursed US$3.1 million in cash to 378 farmers.
The cash payment represents one percent of the US$311 million allocated for the first payment batch.
To date, the Land Compensation Committee has approved a total of 740 claims. The balance will be paid through a 10-year US dollar-denominated bond, Prof Ncube said.
The payment aligns with the revised Global Compensation Deed (GCD), an agreement between the Government and white former commercial farmers to pay US$3.5 billion in compensation for improvements made on the farms compulsorily acquired under the land reform programme.
This development follows the Government's commencement in February of compensating investors whose farms -- protected by Bilateral Investment Promotion and Protection Agreements (BIPPAs) and ratified before the 2000 land reform -- were repossessed.
According to the Constitution, BIPPA farmers will be compensated for both land and improvements, while those who lost land through the fast-track land reform programme will be compensated for improvements only.
"One of our commitments as we try to reform the Zimbabwe economy, to clear our arrears, is really to compensate the former farm owners who lost their farms during . . . the land reform programme," said Prof Ncube.
"We have now begun to honour that agreement".
The bonds offer a fixed annual coupon rate of 2 percent to the holders and incorporates several key features designed to make them attractive and beneficial for the former farm owners.
All payments associated with the bonds, including the annual coupon payments, are entirely exempt from taxation. This is a significant advantage, particularly for elderly recipients, as it ensures the compensation is not reduced by tax liabilities.
The bonds are also designed for easy trading, with the Government intending to engage the Victoria Falls Stock Exchange to list them.
This will provide farmers with the flexibility to sell their bond holdings in the market if they require immediate access to funds before the 10-year maturity, Prof Ncube said.
Furthermore, the bonds are recognised as liquid assets, signifying their immediate value and near-cash equivalence.
The bonds have been granted prescribed asset status, making them appealing to institutional investors like pension funds, potentially increasing demand and supporting their value and tradability.
Under the original 2020 GCD agreement, the farmers were scheduled to receive half of the US$3.5 billion compensation within the first year, followed by four annual instalments of US$437.5 million.
However, facing challenges in raising the necessary funds, the Government re-engaged the farmers, leading to the revised compensation plan now being implemented.
Compensation steering committee chairperson Mr Andrew Pascoe confirmed in an interview with The Herald yesterday that the initial payment was made "about two weeks ago".
Mr Pascoe expressed confidence that more former landowners who were dissatisfied with the revised payment plan will now begin to apply for compensation.
"As the word (about payment) goes out there, we expect the numbers (of applications) to also increase," said Mr Pascoe.
Last year, the Government approved US$145 million in compensation claims for 94 BIPPA beneficiaries and started making disbursements early this year. The majority of these claims originated from the Netherlands (46), followed by Switzerland (27), Germany (14), Denmark (6), and Yugoslavia (1).
A total of US$20 million has been paid so far.
Farmer compensation is a key reform under Zimbabwe's Structured Dialogue Platform for Arrears Clearance and Debt Resolution.
Established in December 2022, the platform facilitates engagement with creditors and development partners, focusing on reforms across economic growth and stability, governance and land tenure, including farm owner compensation and BIPPAs.
Outgoing African Development Bank (AfDB) president Dr Akinwumi Adesina was appointed to champion the dialogue, with former Mozambican President Joaquim Chissano serving as facilitator.
"The payments will continue. We are very serious about this. By settling our arrears, we can tap into long-term capital which is essential for infrastructure development and other significant investments," said Prof Ncube.
"This is not just crucial for the Zimbabwean Government; it also impacts our private sector, which faces restrictions from creditors due to these arrears. Lifting these caps will facilitate access to foreign capital, making it easier to obtain financing to support our industries and create meaningful jobs for our citizens."
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Deputy Chief Secretary in the Office of the President and Cabinet, Mr Willard Manungo, who is also the Co-Chair of the Sector Working Group on Land Tenure Reforms and Compensation, said the payment was a demonstration of the Government's commitment to the country's reform agenda.
"These positive developments present Zimbabwe with a strong opportunity to successfully negotiate its arrears clearance and outstanding debt obligations. It is also a boost towards the country's re-engagement efforts with the international community," said Mr Manungo.
The United Nations Development Programme (UNDP) resident representative to Zimbabwe, Dr Ayodele Odusola, commended the progress being made under the BIPPA settlements, the Land Tenure Reforms, the Compensation frameworks, and the initial disbursements under the GCD.
"These steps are vital for restoring trust, advancing reconciliation, and rebuilding Zimbabwe's agricultural sector. We remain committed to supporting a transparent, inclusive, and sustainable process that contributes to economic recovery and re-engagement," said Dr Odusola.
