Fresh hurdles rock former farmers’ compensation deal

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The deal to compensate white former commercial farmers appears to be off the rails again after the farmers rejected the new payment plan tabled by Government – instead – opting to directly negotiate with some key creditors, it has been learnt.

A referendum to ask farmers if they were agreeable to the deal the Government had offered, was rejected recently with efforts now underway to revive it with the help of the African Development Bank (AfDB) and the international community.

Revealed a source familiar with the developments; “There hasn’t been much traction after the new payment plan was rejected. While the Commercial Farmers Union (CFU) roped in the AfDB, the scope of the negotiations has been broadened to include the international community, some development partners to find a way forward but things haven’t been moving at a pace all parties would want.”

CFU chief executive, Andrew Pascoe, confirmed they have engaged the international community but declined to provide details citing protocol issues.

“At the moment we cannot divulge more information but what I can say is that we have engaged the AfDB and the international community to find the best way forward,” Pascoe said.

However, in an online interview with journalists yesterday, Finance and Investment Promotion Minister Prof Mthuli Ncube there had been a progress in resolving the matter as some of the farmers have agreed to have their dues settled in Treasury bills.

The agreement was signed on July 29, 2020 and provides for the compensation of former white commercial farmers for the improvements they made to their land before it was acquired by the government.

Under the deal, also known as the Global Compensation Deed agreement, the farmers would have received half of the money within the first year, followed by four US$437,5 million annual instalments.

The agreement was signed by the Government and two unions representing dispossessed farmers – CFU and the Southern African Commercial Farmers Alliance.

According to the CFU, the agreement had the support of 2 759 farmers out of 2896 who voted before it was signed, amounting to 95 percent. There were 137 votes against the deal.

According to the CFU, the Government then presented a new deal with longer payment terms, a development the farmers rejected.

The compensation, a prerequisite to the country’s debt clearance strategy, forms part of the implementation of a Global Compensation Deed agreement to pay US$3,5 billion to farmers.

The AfDB has been appointed to champion Zimbabwe’s debt and arrears clearance strategy and this year facilitated Zimbabwe’s meeting with international creditors in Egypt and all except America that cited ZIDERA, refused to support the initiative.

The Government has already defaulted on two occasions after failing to raise money from global financiers as the country suffers the devastating effects of the economic embargoes.

In April 2021, the Government appointed London-based NewState Partners as transaction advisors to help raise the compensation funds from international financiers.

In August, President Mnangagwa hinted that the Government may only be able to liquidate the debt in full in “generations” given the limited capacity of the country to pay such an amount due to limitations as a result of the sanctions.

Zimbabwe began to compulsorily acquire farms owned by about 4,000 white farmers at the turn of the millennium in an exercise it said was meant to redress colonial imbalances.

The exercise, which attracted criticism from the West and their allies triggered the imposition of various forms of economic embargoes against Harare.

Under the country’s Constitution, two types of farmers are supposed to be compensated for both land and improvements on farms and these included (1) a group of “indigenous” Zimbabweans, or black farmers, and (2) white farmers who had land-protected by Bilateral Investment Protection and Promotion Agreements (BIPPAs).

Compensating farmers is central to the Government’s strategy under discussion with the key creditor, the African Development Bank (AfDB), to clear historic arrears of some US$17 billion.

The GCD agreement is regarded as a significant step towards resolving the land reform issue in Zimbabwe. It is also a sign that the Government is committed to respecting property rights and the rule of law.

The GCD agreement provides for the compensation of former white commercial farmers for the following; the value of any permanent improvements made to the land, such as buildings, the value of any crops or livestock that were on the land at the time of acquisition, and the loss of income that the farmers incurred as a result of losing their land.

The GCD agreement also provides for several mechanisms to ensure that the compensation process is fair and transparent. These mechanisms include the establishment of a joint evaluation committee to assess the value of the farmers’ claims and the establishment of an independent appeals tribunal to resolve disputes.

In analyzing the agreement, Economist Intelligent noted “the Government’s proposal for raising the funds for compensation would face major delays. We do not expect substantial compensation to be paid to the farmers in the medium term, and relations with the West will remain poor.”

Over the years, Zimbabwe has had more than its fair share of instances where property and human rights were flouted including violations of the BIPPAs.

So far, white farmers have only received US$1 million, which was part of a dividend declared by Kuvimba Mining House, a state-owned mining entity with vast mining assets.

The Government controls 65 percent of Kuvimba through a 21.5 percent direct stake and other shareholding via state entities, pension funds and a special purpose vehicle created for farmers whose land was repossessed.

Despite the delays, the GCD agreement remains a positive development. It is a sign that the Government is committed to resolving the land reform issue in Zimbabwe in a fair and transparent manner.

In 2019, the Government said it was prepared to pay US$1,2 billion, while farmers demanded US$5,4 billion. – Business Weekly