Treasury’s US$3.1m payment to ex-farmers signals a step towards debt redemption

Yesterday, Finance Minister Mthuli Ncube revealed that Treasury has paid US$3.1m to former commercial farmers, marking the first tangible step in settling the US$3.5bn owed under the Global Compensation Deed (GCD).

It’s a move that has sparked relief among stakeholders and ex-farmers alike—and one that deserves cautious applause.

For over two decades, Zimbabwe has carried the heavy burden of unresolved compensation for land that was expropriated during the 2000 fast-track land reform program.

That program, while rooted in a push for redress and redistribution, left thousands of commercial farmers without compensation and severely dented investor confidence. The consequences continue to ripple across our economy, distorting Zimbabwe’s relationship with international creditors, weakening domestic property rights, and holding back critical capital inflows.

The Global Compensation Deed, signed in 2020, was a landmark agreement intended to break that impasse. Under the terms of the GCD, government committed to paying US$3.5bn to former farm owners—covering improvements made on the land, rather than the land itself. But until now, that commitment has largely remained on paper.

This week’s announcement, therefore, marks the first time the government has actually disbursed funds toward this historic debt.

Let’s be clear, this is a positive move.

But it’s also a long-overdue one.

The disbursement of US$3.1m for 378 processed farms represents just 1% of the US$311 m batch value for the first group of approved farms, and an even smaller fraction of the total US$3.5bn obligation. Still, it sends an important message that the Zimbabwean government is serious—at least for now—about fulfilling its promise.

The use of Treasury bonds to cover the remaining compensation is also notable. Bonds with a 2% coupon and maturities of two to 10 years may not be overly generous, but they provide a mechanism for gradual repayment without immediately overwhelming Treasury’s already stretched resources. The added features—liquid asset status, tax exemption, and tradability—offer a measure of confidence to recipients and signal a willingness to structure debt in a manner that respects capital market norms.

Finance Minister Ncube underscored the government’s intention to continue these payments, highlighting that US$10m has been allocated in the 2025 National Budget and another US$20 million was already committed in the 2024 budget.

The assurance that payments will continue, backed by fiscal allocations, is encouraging.

However, credibility will hinge on actual follow-through, not just policy declarations.

Indeed, the road ahead is fraught with challenges. Government must maintain fiscal discipline in an environment where revenue is often uncertain, inflationary pressures persist, and competing priorities—such as civil service salaries, healthcare, education, and infrastructure—compete for limited funds.

Skepticism is justified.

Zimbabweans have been here before. Promises have been made and broken. Compensation agreements have been signed, only to be shelved or deferred due to shifting political or economic winds. The key difference now is the broader context.

Zimbabwe is currently engaged in a high-stakes arrears clearance process through the Structured Dialogue Platform, which includes international creditors such as the World Bank, African Development Bank (AfDB), and European Investment Bank (EIB). One of the sticking points in these discussions has been the compensation of former commercial farmers and the restoration of property rights.

This payment, modest as it is, serves as a down payment—not just on the GCD, but on the government’s credibility in the eyes of the global financial system. As Deputy Chief Secretary in the Office of the President and Cabinet, Willard Manungo, rightly noted, these developments could strengthen Zimbabwe’s negotiating hand in its bid to clear arrears and restore access to concessional financing.

The private sector, too, has a stake in the success of this process. Many businesses continue to face borrowing constraints and risk premiums because Zimbabwe is seen as a high-risk destination. A credible and sustained compensation program would help lower those barriers, attract capital, and ultimately create jobs.

But we must also acknowledge the political and moral dimension of this issue. Whatever one’s stance on the land reform program, there is no denying that the failure to compensate displaced farmers has stained Zimbabwe’s reputation for over two decades. Addressing this debt—however slowly—is not just about unlocking money; it’s about restoring dignity, honoring constitutional commitments, and beginning a difficult but necessary journey toward national reconciliation.

Andrew Pascoe, chairperson of the Compensation Steering Committee of the Commercial Farmers Union, captured this sentiment well when he expressed gratitude for the government’s effort and stressed the importance of goodwill in building trust. That goodwill, however, is fragile. It will depend on government honoring its word consistently, transparently, and without politicizing the process.

Over 1,300 former farm owners have now signed the revised compensation agreement. That is not a small number, and it signals a growing willingness among stakeholders to move forward. But without consistency from Treasury and clarity about how future payments will be financed and disbursed, that goodwill can quickly erode.

So where does this leave us?

The government deserves credit for taking the first concrete step toward compensating former commercial farmers. It was the right thing to do—economically, morally, and politically.

But one swallow does not make a summer. The true test will be what comes next: Will payments continue? Will bond redemptions be honored in full and on time? Will future budgets reflect the same commitment?

The compensation process must be transparent, predictable, and insulated from political expediency.

Otherwise, the gains made this week will be reversed, and Zimbabwe’s road to debt redemption will remain blocked.

For now, we acknowledge a good move. But we also issue a challenge. Keep going.

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