THE Government of Zimbabwe has approved 538 compensation claims worth nearly US$500 million from white former landowners and those whose farmland was covered by Bilateral Investment Protection Agreements, in a significant step expected to put the country on a firmer footing to resolve its debt and arrears.
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, revealed this in the 2024 National Debt Report released last week.
Compensation has been listed as one of the conditions necessary to resolve the country’s debt and arrears, now amounting to about US$21,1 billion in total. Of that amount, US$12,3 billion is external debt, while US$8,7 billion is domestic debt. Of the domestic debt, US$3, 5 billion is for compensation of former farm owners.
Zimbabwe embarked on the land reform programme in 1999, which saw vast swathes of arable land formerly owned by about 5 000 white farmers being redistributed to indigenous Zimbabweans.
The fast-track land programme also saw some farms protected by BIPPAs also being affected.
The Government entered into an agreement with the former commercial farmers in April 2021 to pay US$3,5 billion under the deal known as the Global Compensation Deed (GCD).
Under the original 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 former white farmers — Commercial Farmers Union (CFU) and the Southern African Commercial Farmers Alliance.
However, the Government faced some challenges in securing the anticipated funding from global partners, leading to delays in fulfilling its compensation promises.
Figures from the Treasury show that the compensation committee in August and September 2024 approved 444 applications for compensation, amounting to US$331,7 million.
In line with the revised GCD payment offer, the Treasury will make payments amounting to US$3,3 million representing 1 percent of the capital amount.
The balance, after netting off US$3,3 million and interim relief payments paid to each of the 444 approved applications, will be settled through issuance of US dollar denominated Treasury bonds with maturities ranging between one and 10 years and a coupon of 2 percent.
Compensation payments for the approved applications were expected to commence during the last quarter of 2024.
The Treasury has also allocated US$10 million in the 2025 budget for the compensation of the former farmers under the GCD.
The compensation committee has approved a total of 94 claims amounting to US$131,3 million from various countries that had BIPPAs ratified before Zimbabwe’s land reform programme.
The majority of the claims, 46, came from the Netherlands, followed by Switzerland with 27, Germany with 14, Denmark with six, and Yugoslavia with one.
“In line with the agreed payment arrangement, with the Sector Working Group (on Land Tenure Reforms under the structured dialogue on debt and arrears strategy), the US$20 million allocated in the 2024 budget is going to be shared equally among the 94 ratified BIPPA protected farms approved by the compensation committee.
“Payment of the US$20 million to the 94 approved applications is expected to be made before the end of 2024. The payment of the balance will be through a multi-year plan, where Treasury will allocate resources in each national budget for the next four years,” said the Treasury.
Better late than never.
Source: Business Weekly
