Former farm owners have made some changes on the government’s proposal of paying the US$3.5bn compensation through a 10-year commercial paper to suit the age profile of the supposed beneficiaries.
The government wanted to pay the US$3.5bn compensation through commercial paper of 10 years, which was rejected by the former farm owners saying it did not augur well with former farmers’ age profile.
“We made some new changes on the government’s proposed deal and currently we are carrying out surveys with our members to see if they agree to the new proposals,” Commercial Farmers Union president Andrew Pascoe told Business Times yesterday.
In 2020, the government agreed to compensate the former farm owners in phases and the first installment of US$1.75bn was supposed to be paid in 2021 and the balance to be paid in four equal installments of US$437.5m per year.
Since then, the government has been shifting goalposts on several occasions much to the chagrin of the former farm owners who fear age may not be on their side, escalating the push for immediate action for Zimbabwe to meet its side of the bargain.
The international community put the compensation of former farmers as a prerequisite for arrears clearance and debt strategy, engagement, and re-engagement processes.
This has pressured the government to start accessing credit lines to ramp up production in various sectors of the economy.
Finance and Economic Development deputy minister Clemence Chiduwa could not be reached for comment but recently expressed happiness with the engagements between two parties.
“Of late, I was not part of the meetings but the fact that the two parties continue to engage, something good will certainly come out, ” Chiduwa recently said.
He said compensation was going to be decided based on negotiation outcomes that are being finalised.
However, the farmers feel there are loose ends that still need to be tied.
Pascoe said there is a need for safety nets to come up with a win-win situation for both parties, no matter what proposal comes through.
Once they are done with surveys they will engage the authorities for the final decision.
There are also concerns that the issuance of TBs worth a staggering US$3.5bn into the market will crowd out private sector funding.
The new deal comes after the government last year proposed an interim cash payment of 10% or US$350m of the Global Compensation value of US$3.5bn, over four years.
Zimbabwe was supposed to pay interim cash payments of US$35m per year for three years, starting in 2023 to 2025, with the balance of US$295m being paid in 2026 from the sale proceeds of the former farmer owners’ 12.5% Kuvimba shareholding and/or sale of any other government asset.
The TBs were said to be issued with features that include prescribed asset status; liquid asset status; tradable; payments emanating from the bonds will not be subject to taxation, including income, capital gains, and/or inheritance in Zimbabwe, and redeemable as and when additional resources become available to the government.
Farmers immediately rejected that deal.