Zimbabwe has started to make compensation payments to white former farm owners, 25 years after then-Zimbabwean president Robert Mugabe’s government began confiscating land.
The government paid US$3.1 million to a “first batch” of 378 farms, the Zimbabwean Ministry of Finance and Investment Promotion said in a statement on Wednesday, the first payout under a 2020 agreement to pay US$3.5 billion in compensation.
The remainder of the US$311 million due to this group of farmers would be paid in US dollar-denominated treasury bonds with two to 10-year maturities and interest of 2 percent.
Photo: EPA-EFE
That is much lower than the current yield on a two-year US treasury bond of about 3.8 percent.
Zimbabwean Ministry of Finance and Investment Promotion Mthuli Ncube said: “The payments will continue. We are very serious about this.”
Mugabe’s government seized more than 4,000 mostly white-owned farms, often violently, from about the year 2000 to redistribute to black people in what it claimed was restitution for the dispossession of British colonial rule.
However, Mugabe and his cronies took nearly 40 percent of the 14 million hectares confiscated for themselves, a 2010 investigation by local news outlet ZimOnline showed.
Agricultural production, which had accounted for 40 percent of exports, plunged and the economy collapsed, with hyperinflation reaching 89.7 sextillion percent in 2008, the second-highest hyperinflation in history, according to the Cato Institute.
Zimbabwe cannot borrow from the World Bank and the IMF as it has been in arrears since 2000 and 2001, respectively. Government debt was US$21 billion late last year, about half of which was arrears and penalties.
The compensation payments to the displaced farmers are one of the requirements of international lenders to start a debt restructuring process with Zimbabwe, including a new IMF program.
Andrew Pascoe, who signed the 2020 compensation deal while head of the Commercial Farmers’ Union, confirmed the first payments had been received on March 24 and thanked Zimbabwe’s government, in comments included in the Zimbabwean finance ministry’s statement. He said: “We are extremely grateful.”
However, Tony Hawkins, a retired University of Zimbabwe professor of economics, said the payments are a “publicity stunt,” adding that the US could block an IMF program.
A US law “restricts US support for multilateral financing to Zimbabwe until Zimbabwe makes concrete governance and economic reforms,” the US Department of State said.
Regarding using government bonds to pay farmers, Hawkins said: “We continue to accumulate arrears because we are unable to service our foreign debt, so we can’t really afford to take on new debt commitments.”
“It’s derisory, the more you look at it,” he added.
About 1,000 former farmers had signed up for compensation, said Harry Orphanides, one of Pascoe’s co-negotiators.
“Look, it’s not a perfect deal, but there was no other alternative,” he said.
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