$3.5bn deal white farmers compensation: Govt fails to make payments; seeks to change deal terms

Spread This News

By Bloomberg News

HARARE: Zimbabwe is proposing changing the terms of a $3.5bn compensation deal signed with white former farmers two years ago, after twice missing agreed-to payments.

The revised plan was part of finance minister Mthuli Ncube’s budget presented on Thursday at the new Chinese-built parliament building, north of the capital, Harare. According to the original pact, farmers who were evicted from their land two decades ago should have received half the money within the first year, followed by four $437.5m annual instalments.

“Under the $3.5bn Global Compensation Deed in September 2022, the government made an offer for the settlement of the GCD which was accepted by former farm owners through a referendum,” said Ncube, referring to the new agreement.

Farmers’ groups will hold talks with Ncube to understand what he meant, according to Andrew Pascoe, president of the Commercial Farmers Union.

“Considerable progress has been made, but we haven’t signed anything yet,” he said by phone, denying a referendum on the terms was held by the group’s members.

The treasury appointed London-based NewState Partners as transaction advisers in April 2021 to help raise money from international financiers.

Resolving the dispute is key to the country pulling out of economic stagnation that the seizures, ordered by then-president Robert Mugabe, triggered. Exports plunged, relations with multilateral lenders were severed, the US and the EU imposed sanctions, and hyperinflation forced the nation to abandon its currency.

The new proposal sees $350m being paid over four years. That would include instalments of $35m a year for three years and the balance in 2026 raised from selling the 12.5% stake the farmers hold in state-owned miner Kuvimba.

“The cash payments will be made in any jurisdiction in dollars to an account of former farm owners’ choice, payable biannually in February and July,” Ncube said.

The government will issue dollar-denominated treasury bonds to pay the remaining $3.15bn.