The government and representatives of the former commercial farmers have signed amendments to the US$3.5bn compensation deal after Harare conceded that it has no capacity to pay the initial US$1.75bn by July as agreed, Business Times can report.
The official announcement of the amendments is now expected to be made by the government next week.
Well-placed sources told Business Times that the deal has gone off the rail as prospective international financiers have now developed a wait and see attitude.
Commercial Farmers Union of Zimbabwe (CFU) president Andrew Pascoe said all parties involved have since signed the amendments to the deal and are willing to honour the new deadlines.
“We have now signed the amendments to the US$3.5bn deal and public announcement is expected to be carried out any time next week. On that event that’s where dates for the first installments will be announced,” Pascoe said.
In July last year, President Emmerson Mnangagwa’s government tabled an offer to pay off the farmers.
It was supposed to pay US$1.75bn in July while the balance would be paid in installments of US$437.5m per year for the next four years.
But the government has indicated that it will not be able to pay.
At least 4,000 white farmers were forcibly evicted from farms during the land redistribution programme in the early 2000s.
Other well-placed sources have told Business Times that there are serious divisions among the former commercial farmers.
“The current delays are caused by some divisions in the CFU where others still need money for the improvements on the farms while others need the actual land to
work on hence an agreement is difficult to reach especially at a time when the government is delaying payments like this,” one source said.
“This has also prompted some potential international financiers to pull out of the deal.”
All efforts to get a comment from Finance and Economic Development minister, Mthuli Ncube, and permanent secretary, George Guvamatanga, were futile.
Market watchers believe that the offer was critical as it marked an important step to end Zimbabwe’s costly two-decade isolation by powerful western nations that imposed economic sanctions on the country after the land reform programme but the country fluffed over the lines.
Several analysts said honouring the deal could see them lifting the sanctions on Zimbabwe, which was once regarded as the bread basket of the region.
Economists said Zimbabwe should first clear its arrears in order to get funding for the compensation deal.
“Other financiers are proposing that Zimbabwe should securitise its minerals especially gold and diamonds to get funding for the compensation deal and other projects and without that no funding is going to come on the silver plate,” one analyst said.
Now that the government has failed to honour its commitment several analysts said the breach will tear into shreds President Mnangagwa’s promise to protect investments under his “Zimbabwe is open for business” mantra.
The southern African nation set up a joint resource mobilisation committee to work with the Ministry of Finance and Economic Development to raise funds for payment of the global compensation deal.
The land compensation deal was signed by Ncube, CFU representative Pascoe, South African Commercial Farmers Alliance (SAFCA) representative Cedric Robert Wilde and Anthony Nield Purkis representing Valuation Consortium (Private) Limited (Valcon).
The CFU represents the interests of commercial farmers operating in Zimbabwe while SACFA represents 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 the CFU or the SACFA.
The government wanted to issue a long term debt instrument in international capital markets, to mature after 30 years, the compensation document said.
The land dispute has been haunting the government.
In 2018, a World Bank-affiliated international appeals court – the International Centre for Settlement of Investment Disputes (ICSID) -dismissed Zimbabwe’s application to annul an award granted to a former commercial white farmer.
The ICSID had in July 2015 awarded the Bernhard von Pezold family the return of their property in Manicaland Province plus their full legal costs and interest, or alternatively the Zimbabwean government was to pay the family US$195m in damages.
In October 2015, Zimbabwe sought the annulment of the award but lost.
The compensation agreement is expected to bring closure to the emotive issue which speaks to property rights.
Resettled farmers have struggled to access financing from banks who continue to shun 99-year leases as not bankable, thereby affecting production on the farms. – Business Times