eBusiness Weekly
Oliver Kazunga
The African Development Bank (AfDB) is working to assist Zimbabwe mobilise the US$3,5 billion the country requires under the Global Compensation Deed to compensate former commercial farmers – one major issue central to the achievement of arrear clearance and national debt resolution.
Through the Global Compensation Deed (GCD) signed in 2020, the Second Republic led by President Mnangagwa has made a commitment to settle the dispute with the farmers over the losses involving improvements made on acquired farmland following the successful land reform programme more than two decades ago.
Speaking during the 4th Structured Dialogue Platform on Zimbabwe’s arrears clearance and debt resolution process in Harare on Monday, AfDB president Dr Akinwumi Adesina, who is the champion of the country’s arrears clearance and debt resolution process noted: “We need a greater sense of urgency on this issue. That is why the African Development Bank is currently working with the Government of Zimbabwe to develop innovative financial instruments and structures that can be used to front-load the mobilisation of the US$3,5 billion for compensations.
“I encourage development partners to work together on this proposed structure, which can help leverage capital markets to fund the compensations without additional debt for Zimbabwe.”
He said the Government has also taken the decision to make land titles available to enhance the security of commercial farmland, and these would be for 99-year leases which are also commercially viable, bankable and transferable.
Dr Adesina said he was concerned about debt, and even more concerned about debt accumulation from arrears that do not have an end in sight.
He said Zimbabwe cannot run up the hill of economic recovery carrying a backpack of debt on its back and thus it was time for a comprehensive debt arrears clearance and debt resolution for the country.
“But getting there is not a walk in the park. We must address history, to make history. Together with Mozambique former President Joaquim Chissano, the facilitator of the high-level dialogues, we have been working closely with you, the Government of Zimbabwe, development partners, private sector, and civil society to find a solution path to the normalisation of economic and financial engagement of Zimbabwe with the international community.
“The people of Zimbabwe have suffered enough. It is time for actions to solve the problems of the past to clear the way for the future.”
After the first dialogue platform on arrears clearance and debt resolution process for Zimbabwe on the 1st of December last year, the parties to the dialogue process assembled in Harare on the 23rd of this year for the second high-level dialogue.
Since then, he said two other high-level dialogues have been held on Zimbabwe’s plans to clear its arrears and resolve debt obligations to creditors.
“Over the past 18 months, we have institutionalised a platform for regular, constructive, and open dialogue that is key for trust and confidence building among all stakeholders. The issues are not just economic or financial.
“They also involve governance, rule of law, human rights, freedom of speech, political level playing field, electoral reforms that will assure free and fair elections; as well as fairness, equity and justice for the commercial farmers and other businesses who were dispossessed of their lands, for which there is a clear need for restitution and compensation.
“This will also include improving the overall business environment to attract greater private investments in line with the ‘Zimbabwe is open for business’ mantra.”
Dr Adesina said the three sector working groups (economic, governance; land tenure reforms, compensation under the GCD and the Bilateral Investment Promotion and Protection Agreements (BIPPAs) have comprehensively discussed these issues over the past four high-level dialogues.
Against this background, he said there is strong and measurable commitment by the Government to economic and fiscal policy reforms.
“The International Monetary Fund (IMF) Article IV mission in December 2022 was successful and was approved by the board of the IMF. The Government has taken the decision to eliminate multiple exchange rates, introduce an enhanced foreign exchange auction market, transfer outstanding debt of the Reserve Bank of Zimbabwe to the Treasury for greater transparency and avoiding off-budget financing; and end the quasi-fiscal activities of the Reserve Bank of Zimbabwe.
“It has also taken decisions to end subsidies and reform state-owned enterprises. Also, the establishment of the liquidity management committee is a proactive measure that will promote effective coordination between fiscal and monetary policies,” said Dr Adesina.
He expressed pleasure that development partners worked closely with the Government in identifying and selecting globally acceptable indicators to measure progress on governance reforms and this reflected how transparent and inclusive structured high-level dialogues are helping to build mutual trust, confidence and mutual accountability for progress.
“On land reforms and compensation, agreements were reached in the sector working group and the high-level dialogue on the Government’s decision to pay US$3,5 billion to former commercial farmers under the Global Compensation Deed, and to fast-track the implementation of the Bilateral Investment Promotion and Protection Agreements (BIPPAs).”
In a communique after the forum, Finance and Economic Development Minister Professor Mthuli Ncube, said since 2018, the Government has been implementing key economic and governance reforms to meet its development objectives.
He said these include economic growth and stability reforms, governance reforms and land tenure reforms in relation to compensation of former farm owners and resolution of BIPPAs.
“In 2020, the Governments signed the Global Compensation Deed (GCD) with former farm owners for US$3,5 billion as compensation for farm improvements on the farms acquired on the land reform programme. “Compensation of acquired farms under Bilateral Protection and Promotion Agreements (BIPPAs) which are not part of the GCD is being considered on a case by case basis and bilateral dialogue has begun.
“In December 2021, the Government adopted the arrears clearance and debt relief restructuring strategy to help resolve the country’s long outstanding debt overhang which is weighing heavily on the country’s development agenda.”
To operationalise this strategy, he said in February last year, President Mnangagwa appointed Dr Adessina to champion for Zimbabwe’s arrears clearance and debt resolution process.
Dr Adessina together with Chissano who was appointed as a high-level facilitator of the dialogue process were working jointly to improve relations between the Government and international creditors.
“In this regard, the Government in December 2022 established a structured dialogue with all its creditors and development partners, three sector working groups were established on economic reforms, governance reforms and then land tenure reforms compensation of former farmers and resolution of BIPPAs.”
Since December 2022, the sector working groups have been working diligently on reform matrices to underpin the arrears clearance and debt resolution process.
“Sector working groups included representatives from the Government, international creditors’ representatives represented by Ambassadors in Harare, the civic society organisations and the private sector.
“The Government also applauds its creditors and development partners for their unwavering strong support for the arrears clearance and debt resolution process.
“The Government is pleased that through these sector working groups, it has managed to successfully institutionalise regular construction open dialogue and build trust and confidence among all stakeholders,” said Mthuli.
