ONE thousand and three hundred former farm owners under the ‘Global Compensation Deed’ have agreed to an offer to receive 1% of US$35 million principal amount to be paid to them this year, it has been revealed.
The agreement includes the issuance of US dollar denominated Treasury bonds with maturities ranging from two to 10 years, with a coupon rate of 2%.
Finance, Economic Development and Investment Promotion minister Mthuli Ncube revealed this deal at last week’s African Development Bank’s (AfDB) annual meetings held in Kenya during a panel discussion.
Ncube was speaking during a session on Zimbabwe’s debt clearance process.
“Government allocated US$35 million for the Global Compensation Deed (GCD) in the 2024 national budget.
“Under the GCD, 1 300 FFOs (former farm owners) have so far registered their interest to sign off this latest offer and agreement with government,” Ncube said.
“In addition, my government made an allocation of US$20 million for compensation of farms affected by the land reform programme, which were protected by BIPPAs (bilateral investment protection and promotion agreements).
“Stakeholders, including embassies of the affected Bippa farms, agreed that eligible and qualifying farms for the US$20 million, are those with Bippas ratified before year 2000 when the land reform programme commenced.”
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In relation to the disbursement of the US$20 million, government, on the 26th of last month, put out an advertisement in the national newspapers concerning the payments, with disbursements expected to commence over the next two months.
Ncube said the administrative payment process had commenced where the Ministry of Lands Agriculture, Fisheries, Water and Rural Development was undertaking verifications of the eligible farmers.
He added that 15% of the 1 300 FFOs had been verified to date.
“The verification of the 1 300 is expected to be completed by the end of July 2024, with payments commencing thereafter,” the minister said.
Government owes the FFOs following the controversial repossession of farms during the 2001 Land Reform Programme leading.
Consequently, the government of Zimbabwe owes the FFOs US$3,5 billion.
This forms a significant portion of the over US$20 billion public debt the country has.
Also speaking during the annual meetings, AfDB regional development, integration and business delivery vice president Mari Laure Akin Olugbade commended the Zimbabwean government for making efforts to compensate FFOs.
“On former commercial farmers, here again, the government has agreed to compensate the former farm owners, as agreed under the Global Compensation Deed and the Bilateral Investment Partnership Protection Agreement. And really this agreement is consistent with the Zimbabwe Constitution,” she said.
“And from what we know, I think, in terms of update, we were pleased to see that the government has advertised in the local papers that Bippa farmers can now begin to lodge their papers so that the compensation process can start.”
Former Mozambican president Joaquim Chissano said he was confident that the direct engagement of Zimbabweans with their government could lead to an agreement on a PVO Bill that was acceptable to all parties.
He said reforms under land tenure and compensation of former farm owners include the finalisation of a new 99-year land lease that was tradable and bankable.
Before, farming land was the biggest asset used as collateral, which has over the years shrunk to paltry or almost non-existent numbers as financial institutions have requested for title deeds for these farms.
“The drafting of a new land lease is progressing with technical assistance from the AfDB through the African Legal Facility,” Chissano said.
“As for compensation, we are happy to note that in the current annual budget, the government has allocated US$55 million for compensation, notably, US$35 million for former farmers and US$20 million for IPAs. And the first payments are expected by June 2024.”
Chissano, together with AfDB president, Akinwumi Adesina, are leading the debt resolution process for Zimbabwe.
