Govt mulls 30-year bond for white farmer compensation
Harare, (New Ziana) – Finance and Economic Development Minister, Mthuli Ncube said on Wednesday issuance of a 30-year debt instrument on the global financial market was top of the government’s agenda as one of the ways to mobilise US$3.5 billion required to compensate former farmers who lost land under the country’s historic land reform programme.
The government on July 29 signed the Global Compensation Deed, an agreement to compensate former white farmers who had land compulsorily acquired by government under the land reform programme, for improvements made on the land.
Under the deal, the government, agreed to set up a joint committee with farmer representatives to raise the funding, targeting at least US$1.75 billion in the next 12 months and the reminder in two years.
Ncube, who described the agreement as “a major milestone in the resolution of the land acquisition process”, said a 10-member joint committee had since been set up.”
“We are going to hire a financial advisor to assist in raising the funding. We are keen to use a 30-year debt instrument, that is why we need a financial advisor because this has to be placed in the global capital markets and that’s an investment banking exercise for which we require a financial advisor,” the finance minister told journalists at a post Cabinet briefing.
He said the committee would also look at ways to mobilise funding locally including a possible listing of part of the bond on the Victoria Falls Stock Exchange.
“It will be interesting to see if we can place part of this 30-year bond in the domestic markets so that those investors who wish to invest can invest as well, maybe we could even place it on the Vic Falls Stock Exchange in hard currency,” Ncube said.
He said the fundraising committee, made up of six government representatives and four members from the farming community, had already “begun to test and probe a couple of partners that we think could come on board.”
“We are determined to make sure by August next year we will have raised 50 percent of the target,” he said.
Compensation of the farmers, which has attracted both supporters and critics locally, is enshrined in Section 72 of the country’s Constitution.
Ncube said regardless of successes or lack thereof in raising funding on the global market, government, would in its annual budget continue to set aside funding to compensate especially “vulnerable and elderly farmers.”
Zimbabwe embarked on the land reform programme in the early 2000s to balance colonial land ownership imbalances that favoured minority whites.
Over 400 000 black families were resettled on the land.