COVID-19 stalls compensation of former white farmers
Harare (New Ziana) – The COVID-19 pandemic has slowed down the planned resource mobilisation process for the compensation of former white commercial farmers in terms of the July 2020 Global Compensation Deed (GCD), a Cabinet Minister said on Tuesday.
Under the GCD, the Zimbabwe government undertook to pay US$3.5 billion in compensation to the former white commercial farmers.
The move sought to bring finality to the land reform programme which saw the government expropriate vast tracts of land that was in the hands of a few white farmers to resettle thousands of landless black families.
A number of financing models had been planned by government including issuing long term domestic and international bonds, but these have been delayed due to the ongoing pandemic.
In an update on Tuesday, Finance and Economic Development Minister Professor Mthuli Ncube also blamed the payout delay on the delayed appointment of a financial advisor for the joint resource mobilization process.
“The longer than had been anticipated period for the appointment of the financial advisors and the COVID-19 pandemic slowed down the resource mobilisation process. The parties to the GCD, therefore agreed to extend the period for the first payment from 31 July 2021, to 31 July, 2022, the parties signed an addendum to the GCD on 7 May 2021 to give legal effect to their agreement,” he said.
According to the original agreement, the affected former farmers were to receive 50 percent of their compensation after a year of the signing of the agreement and the balance within five years.
But, because of the delays, Ncube said government has been utilising a Z$2 billion budget allocation to make “interim relief payments,” to distressed farmers.
On top of that, the former farmers have also received a partial payment from a special purpose vehicle that was created for the former farmers in Kuvimba Mining House-a government controlled mining entity.
“In addition, on 18 December 2020, government secured USD 250 million towards the compensation process through the donation of a shareholding of equal value in a mining asset-Kuvimba Mining House, to a special purpose vehicle specifically created to raise funds for the GCD.
“The first dividend from this long term shareholding was paid on 23 June 2021, an amount of USD1million was declared in favour of the fund for compensating former farm owners and this amount will be applied towards partial settlement of the agreed global compensation figure. Subsequent dividends will be paid quarterly and applied in the same manner.”
Ncube said other financing instruments and funding options being worked on included structured financial arrangements including the issuance of asset backed securities and off balance sheet financing arrangements using commercial guarantees.