HARARE – The Government has initiated the process of compensating white former commercial farmers whose properties were acquired under the Land Reform Programme, marking a crucial step forward in addressing this enduring issue and paving the way for the country’s arrears clearance and debt resolution.
Finance Minister Mthuli Ncube announced that the Government is issuing US$308 million in Treasury bonds and has already disbursed US$3.1 million in cash to 378 farmers. This cash payment reflects one percent of the total US$311 million allocated for the first wave of compensation.
To date, the Land Compensation Committee has approved 740 claims, with the remaining compensation slated to be distributed through a 10-year US dollar-denominated bond.
This initiative is in line with the revised Global Compensation Deed (GCD), an agreement between the Government and white former commercial farmers to provide US$3.5 billion in compensation for improvements made on the properties that were compulsorily acquired during the land reform.
This move follows the Government’s earlier efforts, beginning in February, to compensate investors whose farms, protected by Bilateral Investment Promotion and Protection Agreements (BIPPAs) and ratified prior to the 2000 land reform, were taken back.
According to the Constitution, BIPPA farmers will receive compensation for both land and improvements, while those affected by the fast-track land reform will only be compensated for the improvements made.
The bonds being issued come with a fixed annual coupon rate of 2 percent and incorporate several features designed to enhance their appeal for former farm owners. Notably, all payments related to these bonds, including annual coupon payments, are exempt from taxation—providing significant benefits to elderly recipients by ensuring that their compensation remains unaffected by tax burdens.
To enhance liquidity, the Government plans to list the bonds on the Victoria Falls Stock Exchange, allowing farmers to trade their bond holdings for immediate funds if needed before the 10-year maturity period.
Moreover, the bonds are classified as liquid assets, indicating their immediate value and equivalence to cash. They also hold prescribed asset status, making them attractive to institutional investors like pension funds, which could boost demand and enhance their value and tradability.
Under the initial 2020 GCD agreement, farmers were expected to receive half of the US$3.5 billion compensation within the first year, followed by four annual payments of US$437.5 million. However, facing challenges in securing the necessary funds, the Government has re-engaged with the farmers, leading to the current revised compensation plan.
Andrew Pascoe, chairperson of the compensation steering committee, said the first payment was made approximately two weeks ago. He expressed optimism that more former landowners dissatisfied with the revised compensation plan will now seek compensation.
