Former commercial white farmers have set new conditions after the government came up with a revised payment plan on the US$3.5bn compensation deal.
The new payment plan, the second within two months, comes after the government defaulted on the US$1.75bn it was supposed to pay at the end of July, according to the Global Compensation agreement signed in 2020.
Finance and Economic Development minister Mthuli Ncube then proposed a 20-year bond deal, which was rejected by the farmers due to its longevity.
Ncube recently came up with a plan in which a cash payment to settle 10% of the full amount – US$350m—over the next four years and will thereafter issue a bond in year six at a minimum coupon rate of 10%.
The Commercial Farmers Union president Andrew Pascoe told Business Times that new conditions have been put in place.
“But, we still need to go back to the government and negotiate and see whether they can accommodate the request of the farmers. We have our legal representation that will be interacting with the government so that we can come up with something that can work,” Pascoe said.
He added: “Farmers are not very happy with bonds, especially government bonds.
“We are still in negotiations with the government that came back with a compromised proposal which proposed to give us a cash upfront payment.”
It is understood that the government through its international advisors, NewState Partners, will also pursue an arrangement with IATA to put a levy on international tickets into Zimbabwe with the hope that such a levy will raise US$200m for the country.
The guaranteed cash flows will then be used to raise an instrument for US$2bn.
Treasury bonds will then be issued out in year six depending on the outcome of the initiatives.
“We have got an offer put to us to get a small cash upfront payment and then we are going to the bonds,” Pascoe said.
He said there should be a guarantee to protect their agreements to avoid merry go rounds that have been happening over the years.
“We still have what the government has presented to our farmers and we are saying if we can go that route there will be some concessions from the government. So, now we have got to negotiate with the government and see what they are prepared to offer.
“We will see whether they are prepared to give concessions to safeguard the guarantees that the farmers are asking for,” Pascoe said.
He added: “If you consider that some of the farmers will not be around by that time as some are 85 and 90 years old.”
Two years ago, Zimbabwe tabled a US$3.5bn offer to the former farmers.
This was in addition to the interim relief compensation being paid to 800 destitute white farmers.
The parties to the agreement are the government through the Finance Ministry, the Commercial Farmers Union, the Southern African Commercial Farmers Unions and Valuation Consortium.
Of that amount, US$1.75bn was supposed to be paid in July this year while the balance would be paid in installments of US$437.5m per year for the next four years.
But the government has defaulted.
It is not the first time that the government has defaulted on the obligation.
The farmers will go to a referendum where they will have an opportunity to vote for yes or no to make a decision.
This week, the government and farmers have started the engagements to map the way forward.