Zimbabwe made the country’s first payment, US$3.1 million, to the former commercial farmers who were white. This is a significant move towards implementing an agreement to compensate farmers for the year 2020.
This move comes after several years of talks aimed at settling long-standing disputes stemming from Zimbabwe’s land reform program.
The deal, signed in 2020, states that Zimbabwe does not have to pay for the land that was taken in the controversial reforms but will only pay for infrastructural improvements to the farms. The compensation formula was negotiated as a compromise to address historical grievances as well as efforts to boost economic growth.
Based on the Ministry of Finance, just one per cent of compensation is paid in cash, the majority of it being paid out by US-denominated Treasury bonds.
These bonds have only a modest 2% annual interest rate and come with different maturities, ranging between 2 and 10 years.
So far, 740 farms have been granted compensation. The current US$3.1 million payment is aimed at the first 378 farms, which collectively have a total value of compensation of US$311 million.
In a separate procedure, Zimbabwe is also compensating farmers who were protected by Bilateral Investment Promotion and Protection Agreements (BIPPAs) in which complete payment for improvements to land and the surrounding area can be legally demanded.
Finance Minister Mthuli Ncube claims that the decision is part of efforts to reconnect with international lenders and to clear old arrears, opening the way to fresh loans from institutions like the World Bank and AfDB.
