Treasury moves to settle US$3.5bn debt to ex-farmers

CLOUDINE MATOLA

Treasury has made a  move towards resolving the US$3.5bn debt owed to former commercial farm owners, disbursing US$3.1m for 378 processed farms as part of its commitment under the Global Compensation Deed (GCD).

This payment marks the first step in addressing the debt owed to farmers whose land was expropriated during the 2000 land reform program.

Signed in 2020, the GCD committed the government to compensate these farmers. The recent payment, which represents 1% of the total compensation value, is part of the government’s broader effort to fulfill its obligations.

Minister of Finance, Economic Development, and Investment Promotion Professor  Mthuli Ncube confirmed the disbursement and outlined the next steps.

“The Government of Zimbabwe has begun fulfilling its commitment to compensate Former Farm Owners (FFOs) under the Global Compensation Deed signed in 2020. To date, 740 farms have been approved for compensation by the Land Compensation Committee. Government has disbursed US$3.1m for the first batch of 378 processed farms, which constitutes 1% of the total compensation claim value of US$311 million. Additionally, Treasury bonds were issued for the first batch of farmers to their custodian bank,” Professor Ncube said.

As part of the GCD agreement, farmers will receive 1% of their compensation in cash, with the remainder paid through US dollar-denominated Treasury bonds.

These bonds, offering a 2% coupon and maturities ranging from two to 10 years, come with features such as liquid asset status, tax exemption, and tradability.

“In line with the GCD agreement, FFOs will receive 1% of their claim in cash, while the remainder will be paid through US dollar-denominated Treasury bonds. Government has allocated US$10 million in the 2025 National Budget for FFO compensation. Payments are being made to interested individual farmers,” Ncube added.

The government reiterated that compensation payments would continue, as addressing these arrears is essential for accessing long-term capital, which is crucial for infrastructure development and other strategic projects.

“The payments will continue. We are serious about this. By settling our arrears, we can access long-term capital, which is essential for infrastructure development and other key investments. This is not just critical for the Zimbabwean government but also for the private sector, which faces restrictions from creditors due to these arrears. Lifting these caps will facilitate access to foreign capital, making it easier to secure financing for industries and create jobs,” Professor Ncube said.

Deputy Chief Secretary in the Office of the President and Cabinet, Willard L. Manungo, who also co-chairs the Sector Working Group (SWG) on Land Tenure Reforms, Compensation of FFOs, and Bilateral Investment Protection and Promotion Agreements (BIPPAs), emphasized that the compensation payments reflect the government’s commitment to reform.

“This is yet another demonstration of the government’s commitment to its reform agenda. These positive developments give Zimbabwe a strong opportunity to successfully negotiate the clearance of its arrears and outstanding debt obligations. It is also a boost to the country’s re-engagement efforts with the international community,” Manungo stated.

Andrew Pascoe, Chairperson of the Compensation Steering Committee of the Commercial Farmers Union, also expressed appreciation for the government’s efforts. He confirmed that the first payments were made in March 2025.

“On Monday, 24 March 2025, the first US dollar cash payments were made under this plan to the signed-up Former Farm Owners. On behalf of these farmers, I would like to thank His Excellency, President Emmerson Mnangagwa, and his government for standing by the commitment made in 2018 to pay compensation for acquired farms in line with the Constitution of Zimbabwe. We are extremely grateful, and we are confident that the ongoing fulfillment of these commitments will help strengthen the goodwill necessary for the success of the current Structured Dialogue Platform (SDP) on Arrears Clearance and Debt Resolution Process,” Pascoe said.

Over 1,300 farmers have now signed the revised compensation agreement, with the government allocating US$20m for compensation in the 2024 National Budget.

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