US$3,5bn white farmers compensation deal financial advisors appointed

Professor Mthuli Ncube

GOVERNMENT has started mobilising resources under the US$3,5 billion Global Compensation Agreement (GCA) between the State and former white commercial farmers with the recent appointment of financial advisors expected to catalyse the process.

Treasury has noted the delays in the process of appointment of financial advisors, which, coupled with the Covid-19 pandemic, have slowed down the resource mobilisation process since the signing of the deal last year.

As a result, the parties to the Global Compensation Deed have now agreed to extend the period for the first payment from this month to July next year.

The Second Republic led by President Mnangagwa has made commitment to settle the dispute with farmers over losses involving improvements on acquired farmland following the successful Land Reform programme more than two decades ago.

Finance and Economic Development Minister Professor Mthuli Ncube, who is also the Joint Resource Mobilisation Committee (JRMC) chairman, announced the latest developments in a statement yesterday.

In compliance with the Public Procurement and Disposable of Public Assets Act (Chapter 22:23), the minister said procurement of financial advisory services for the resource mobilisation process began with the issuance, through Treasury, of an international call for expressions of interest last year in September.

“The procurement process went through several stages which took longer than had been originally anticipated. Nevertheless, we are pleased to advise that the process has now been completed and the contract with the financial advisors — Newstate Partners, was signed on April 21, 2021,” said Prof Ncube.

“The financial advisors have already commenced work with the JRMC supporting its capital-raising. The parties signed an addendum to the Global Compensation Deed on 7 May 2021 to give legal effect to their agreement,” said Prof Ncube.

The Government secured US$250 million last December towards the compensation process through the donation of a shareholding of equal value in a mining asset-Kuvimba Mining House, a special purpose vehicle specifically created to raise funds for the GCA. The first dividend from this long-term shareholding was paid last month.

An amount of US$1 million was declared late last year in favour of the fund for compensating former farm owners and this amount will be applied towards partial settlement of the agreed global compensation figure, said Prof Ncube.

Subsequently, he said, dividends will be paid quarterly and applied in the same manner.

Working with Newstate Partners, the minister said, a number of possible financing instruments and funding options were already being worked on.

“These include, but not limited to: bonds issued domestically (both listed and unlisted), bonds issued into international markets (both listed and unlisted), listed and unlisted equity and quasi equity type instruments, structured financial arrangements including the issuance of asset backed securities, and off-balance sheet financing arrangements using commercial guarantees,” he added.

The Government believes that the structure will augment and complement the resources that have already been made available. Prof Ncube said Treasury has funded the establishment of a dedicated JRMC Project Office manned by a full secretariat. The project office is also receiving technical assistance support from international co-operating partners.

“The office is now operational and has been given impetus to the joint resource mobilisation process,” he said.

In this year’s national budget, the Government committed an amount of $2 billion towards the compensation of the former white commercial farmers and the resources are being disbursed to distressed ex-commercial farmers as interim relief payments.

According to observers, the Government’s gesture is in tandem with its re-engagement drive and re-connecting with traditional allies and address its respect for property rights record.

Through the fast-track Land Reform programme, the Government compulsorily acquired farmland from white farmers to resettle landless blacks. This was meant to redress colonial land ownership imbalances that were skewed in favour of whites, and to economically empower the country’s majority blacks.

Consequently, Zimbabwe was slapped with the illegal economic embargo by Britain and her allies. During the two decades the economic embargo has been in place, Zimbabwe’s economy went on a tailspin that culminated in record inflation of over 500 billion percent, according to the International Monetary Fund (IMF).

The country has not recovered from the sanctions battering and resultant economic difficulties, which also saw collapse of industry and agriculture, degeneration of infrastructure and joblessness. —Chronicle