White former commercial farmers have turned to the African Development Bank (AfDB) to facilitate further negotiations to hummer a sustainable solution on the US$3,5 billion deal they signed with the Zimbabwean Government three years ago after members rejected new proposed payment terms, Business Weekly can reveal.
Zimbabwe came up with a revised plan last year after twice missing the agreed terms under the pact known as the Global Compensation Deed, but the farmers, whose farms were acquired during the Land Reform Programme, which started at the turn of the millennium, turned down the new payment terms through a recent referendum.
The implementation of the deal is one of the major conditions set by the country’s foreign creditors before they accept its proposed arrears clearance and debt resolution strategy.
AfDB president, Dr Akinwumi Adesina, whom President Mnangagwa appointed champion to the country’s arrears clearances and debt restructuring, leads the financial institution that is also owed in excess of US$600 million.
Dr Adesina is working with former Republic of Mozambique’s President Joaquim Chissano, who is facilitator to the dialogue.
Under the original agreement, farmers were supposed to receive half the money within the first year of signing the deal, followed by four US$437,5 million annual instalments.
However, under the new deal, Zimbabwe proposed to pay an interim cash payment of US$35 million per year for three years from 2023 to 2025, with the balance of US$295 million being liquidated in 2026 from the sale proceeds of the (funds from operations) 12,5 percent Kuvimba shareholding sale or any other Government asset.
Government owns 65 percent stake in Kuvimba, a diversified mining company with rich gold, platinum and chrome assets.
“When we did the survey, we found out farmers are not happy with the new terms, so we have engaged the African Development Bank to facilitate further negotiations,” Commercial Farmers Union (CFU) president Andrew Pascole told Business Weekly.
“In fact, farmers who responded to the survey rejected the new offer.”
This week people familiar with the deal, said the farmers are “skeptical” about the payment period.
“They are skeptical about the proposed sources of funding, the Government’s ability to mobilise domestic resources, and also the ability to meet the deadlines,” said one person who declined to be identified citing protocol issues.
Calls seeking comment from Finance and Economic Development Minister Professor Mthuli Ncube, were not answered.
However, his deputy Clemence Chiduwa said he was unaware if the farmers had officially communicated their position to the Government.
“I know they (the farmers) have been engaging, but I am not sure of their latest position because I have not been in office. I have to check if their position has been formally communicated to the Government,” said Chiduwa.
The stalemate, analysts fear, could derail the arrears clearance and debt restructuring dialogue as this was set as one of the major conditions the creditors would consider the country’s plan to repay.
Zimbabwe has been unable to mobilise funding from the multi-lateral financial organisation because of huge foreign liabilities, constituted by debt and arrears amounting to nearly US$18 billion.
“This is a very critical stage needed to resolve the country’s debt issue and any kind of stalemate would derail the whole process,” Job Musara, a development economist with a local university said in an interview on Thursday.
AfDB president Dr Adesina said the bank was working with the Government of Zimbabwe to develop innovative financial instruments and structures that can be used to front-load the mobilisation of US$3,5 billion to compensate the farmers.
Dr Adesina appealed to development partners “to work together on this proposed structure which can help leverage capital markets to fund compensations without additional debt for Zimbabwe.”
He, however, cautioned against further delays, which could erode trust and confidence.
“So, timing counts; responsiveness counts; and financial sustainability counts,” Dr Adesina said.
He expressed concern over the country’s debt and a “debt accumulation from arrears that don’t have an end in sight.”
“Zimbabwe cannot run up the hill of economic recovery carrying a backpack of debt on its back. It is time for a comprehensive debt arrears clearance and debt resolution for Zimbabwe. But getting there is not a walk in the park. We must address history, to make history.”
He added, “The debt itself is not as debilitating as the arrears on the debt since the country cannot access international concessional financing or other revenue or less expensive financing to pay down its debt obligations.”
Speaking during a high-level debt resolution forum in May, President Mnangagwa reassured development partners and creditors that Zimbabwe was committed to the implementation of key economic and political reforms critical to resolving the country’s debts and arrears.
Zimbabwe’s total consolidated debt stands at US$17,5 billion. Debt owed to international creditors stands at US$14,04 billion, while domestic debt stands at US$3, 4 billion.
Debt owed to bilateral creditors is estimated at US$5,75 billion, while debt to multilateral creditors is estimated at US$2,5 billion. The country is in arrears for servicing its debt, with arrears to multilateral development banks, including the African Development Bank, the World Bank, and the European Investment Bank.
Zimbabwe began to compulsorily acquire farms owned by about 5 000 white farmers at the turn of the millennium in an exercise it said was meant to redress colonial imbalances.
The exercise, which attracted widespread criticism from the West and their allies triggered the imposition of various forms of economic sanctions 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).
Latest efforts towards engaging creditor nations
During the AfDB annual general meetings in May this year in Egypt, Sharm El Sheik Resort, Dr Adesina set aside a day to facilitate a meeting between Zimbabwean President Mnangagwa and representatives of creditor nations and funding institutions.
During the highly subscribed meeting, a number of development partners and creditors embraced Zimbabwe’s arrears clearance and debt resolution process, with some expressing interest to work with Harare on various development programmes for the country to regain its footing after being burdened by debt and devastated by sanctions for a long time.
Only America was offside as its representative insisted his would not participate in any forum discussing Zimbabwe arrears clearance and debt resolution as long as the Zimbabwe Democracy and Economic Recovery Act was still in place. – Business Weekly