Zimbabwe's US$3,5bn farmer compensation plan - ZimFact
Ngoni Mhuruyengwe
June 29, 2021
Zimbabwean commercial farmer Tommy Bayley rides an old bicycle ahead of war veterans and villagers, who invaded his farm at Danbury Park outside the capital Harare. REUTERS/Howard Burditt/Files
On 29 July, 2020, the Zimbabwe government and two unions representing white farmers signed an agreement to compensate farmers dispossessed under the land redistribution programme for the loss of their assets, but not the land.
In terms of the agreement, the farmers would receive US$3,5 billion spread over five years, starting from July 2021.
Half of the US$3,5 billion was supposed to be paid by the end of July 2021.
With that deadline fast approaching, the Zimbabwe government has asked for an extension by another year, Commercial Farmers Union president Andrew Pascoe told Bloomberg on June 23.
That same day, 23 June 2021, a government-controlled mining company, Kuvimba Mining House, paid out US$1 million towards the farmer compensation fund. The payment was part of a US$5,2 million payout to shareholders collectively holding 65% of Kuvimba.
Here are key details of the farmer compensation deal:
Who signed?
The agreement was signed by the government of Zimbabwe and two unions representing dispossessed farmers – the Commercial Farmers Union (CFU) and the Southern African Commercial Farmers Alliance.
According to the CFU, the agreement had the support of 2759 farmers out of 2896 who voted before it was signed, amounting to 95%. There were 137 votes against the deal.
What is being compensated for?
In terms of Zimbabwe’s Constitution, adopted in 2013, the government is liable to only pay for farm improvements and not the land seized from white farmers.
How was the US$3,5bn arrived at?
In the beginning, there was a wide gap between what the government was prepared to offer and what the farmers wanted.
In 2019, the government said it was willing to pay US$1,2 billion, while farmers held out for US$5,4 billion.
Eventually, with the help of World Bank valuation experts in a programme funded by the European Union and the United Nations Development Programme, a compromise figure of US$3,5 billion was reached.
Where will the money come from?
Zimbabwe clearly does not have the money to compensate the farmers. The government hopes to team up with white farmers to mobilise international financial support for the scheme. However, key financiers such as the World Bank have made it clear they do not intend to pick up the tab.
Part of the government’s plan is to borrow on the international capital markets, using debt instruments extending to as much as 30 years. It remains to be seen how the markets would respond to this.
In the meantime, the government has created a special purpose vehicle with a 12,5% interest in diversified mining company, Kuvimba. From this, the government made a US$1 million payment to the farmers, following a dividend payment by Kuvimba.
Kuvimba’s assets include six gold mines, a nickel producer, a ferrochrome processor and a 50% stake in a platinum mine being developed on the Great Dyke.
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