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By Brendan Seery

Deputy Editor

Zimbabwe can’t pay white farmers despite $3.5 billion compensation deal

Farmers were told government had tried, and failed, to raise the compensation money on the international markets.

White Zimbabwe farmers, whose land was seized by the government and war veterans in the 2000s, have been told the government has no money to pay the agreed $3.5 billion (about R49.7 billion) compensation.

The compensation deal was struck in July 2020 and the amount agreed related only to improvements the farmers made to the land.

The land itself was supposed to have been paid for by the British government on a “willing buyer, willing seller basis” as part of the historic independence settlement at the end of 1979, which brought about the end of white rule in the country.

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At a meeting in Harare yesterday, arranged by the country’s Commercial Farmers Union and attended by farmers and their families, as well as Finance Minister Mthuli Ncube, farmers were told the Zanu-PF government, which is under sanctions by Europe and the US, had tried, and failed, to raise the compensation money on the international markets.

The first tranche of the compensation payment – of $1.75 billion – was due to have been paid tomorrow.

Rafael Molina, whose Newstate Partners firm was engaged by the Harare government to find a solution to the problem, told farmers that, despite going to the markets, the government “couldn’t raise money anywhere”.

Despite improving exports, especially of gold and other minerals, the Zimbabwe government remains broke and struggles to pay its civil servants even basic salaries.

Molina said his firm proposed that the farmers be issued bonds – denominated in US dollars – for what they were owed.

The government would then commit to pay interest on these bonds… although he acknowledged that the interest rate would be low “at first”.

READ MORE: SCA Zim farmer’s ruling proves rule of law can’t be tossed into a bin

This was to allow the government to rebuild its reputation as a reliable lending risk.

“If you demand too much and they default, then your bonds will be worth nothing,” Molina added.

He likened the bonds to similar financial instruments issued after the collapse of the Soviet Union in the 1990s, which took some years, but eventually gained credibility and a value in the global market.

Molina acknowledged that the Zimbabwe farm compensation deal was a “leap of faith” but said the bonds would be listed on the local stock exchange and on the Johannesburg Stock Exchange and would, in time, be able to be traded.

However, emotional farmers told him and the minister that they had already been waiting for compensation for more than 20 years and that some, who are already well over retirement age, would probably not live to see the money promised.

The compensation deal – termed the Global Compensation Deed, was agreed by President Emmerson Mnangagwa with the farmers in July 2020.

READ MORE: Zimbabwe’s drought-hit farmers fear hunger

The first payment under the deal was made in July 2021 when the state-linked Kuvimba Mining House Ltd transferred $1 million to the farmers, with the government asking to defer the payment of $1.75 billion to this July.

In May this year, it was reported that the SA government could face an R2.5 billion compensation payout to white Zimbabwean farmers after the Supreme Court of Appeal (SCA) ruled former president Jacob Zuma illegally closed their avenue to seek justice.

The court in Bloemfontein ruled in favour of more than 200 Zimbabwean farmers claiming against the government after Zuma “illegally, irrationally and unlawfully” closed the Southern African Development Community tribunal.

AfriForum’s Willie Spies, representing the farmers, said he considered the ruling to be of historical value.

“It was probably the first time that the court of appeal allowed the institution of a subpoena against the South African government for misconduct committed outside the country’s borders.

“The farmers have successfully appealed against an earlier ruling of the High Court in Pretoria in the epic legal battle of Zimbabwean farmers against the South African government,” Spies added.

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