Government’s farm compensation conundrum 

Source: Government’s farm compensation conundrum | The Financial Gazette December 22, 2017

By Tabitha Mutenga, Features and Supplements Editor

PRESIDENT Emmerson Mnangagwa’s reiteration of the ZANU-PF government’s commitment to compensate former white farmers who lost farms under the land redistribution programme drew some of the most attention among his early policy pronouncements.

While it is certainly not a new policy, having been incorporated into the 2013 Constitution, but many believe Mnangagwa — who also wants to restore ties with western governments — will give more impetus to the compensation drive than his predecessor, former president Robert Mugabe. However, the harsh reality is that Zimbabwe’s skint government, struggling to fund its functions, lacks the capacity to put up the billions required to pay off dispossessed white farmers. This reality was laid bare by the 2018 budget documents tabled in Parliament on December 7.

This year, government only managed to pay compensation for just five former commercial farmers, the documents show. A statement by the Lands, Agriculture and Rural Resettlement ministry, carried in the 2018 Budget Blue Book, indicates that 689 farms had been valued for compensation purposes and data for nine farms was certified as correct. “Five former farmers were fully compensated, 28 were partially compensated for land and immovable farm improvements,” says the Lands Ministry’s permanent secretary Ringston Chitsiko in notes appended to the ministry’s vote.

For 2018, only $13 million has been provided, in the budget, for compensation for land improvements. “It is a drop in the ocean — not sure what he hopes to achieve — it may be just for the audit process,” former Cold Storage Company chief executive Eddie Cross said. Presenting the 2018 National Budget, Finance Minister Patrick Chinamasa emphasised the need to pay compensation in line with the Constitution. The statement indicated money had been set aside both for farm compensation and for those areas under bilateral investment treaties.

In a December 2017 newsletter, the Compensation Steering Committee led by John Laurie acknowledged government’s commitment and said both parties were still working to come up with a global figure for compensation which would be acceptable to both parties. “We are extremely encouraged by the direction being taken and words spoken by the President and his ministers in view of the need to deal with the land issue in its entirety, as a matter of urgency,” Laurie said.

Government, under the new leadership of President Mnangagwa, is urgently addressing all issues related to land tenure in order to bring finality and closure to the management and ownership of land, which is critical for increased land utilisation. Independent valuations place the properties at between $10 billion and $30 billion. “About three percent of the affected farmers have accepted compensation at levels which are a tiny fraction of the real values. This was because they were desperate for some income.

“The compensation can be looked at in several ways: If the United Nations principles for compensation for property that have been forcibly taken over by the State are followed (land, assets, interest, compensation for loss of income and disruption plus compensation for any personal injury or harm) then we are looking at $30 billion or more,” Cross said. “If we are talking of just improvements, then about $6 billion. If we are talking about assets and land using current values then we are looking at about $10 billion.

We need to include farm staff and the sugar industry and this would increase any compensation deal quite significantly. In the end the government will have to negotiate with the affected persons.” Cross added. The paying of compensation following the land reform programme remains one of the most pressing and emotive land issues in the country. Delays in the payment of compensation have caused uncertainty and limited agricultural investment, undermined trust and prevented international re-engagement.

Government is already engaged in the mapping and valuation of improvements on farms acquired under the 2000 land reform programme so that it can compensate the farmers. “I feel sure that the average values will not be less than a million dollars, but I know that many of the bigger farmers were arguing for figures close to $10 million. However, if an average of a million was paid out to 4 000 farmers, that total would reach $4 billion. On more accurate valuations, the amount needed could be three times that amount,” economist John Robertson said.

“Various people have suggested to me that the total bill will come to at least $10 billion. Right now, finding somebody to come up with that figure seems a long way off. We might continue to get small numbers being paid off every year, but at this stage it is hard to imagine that billions will arrive from outside to pay off people so they can retire or emigrate,” he said. Government has always accepted that they had to pay compensation to the owners for the title deeds. The only question was how much and on what basis and when.

The former farmers have, since 2000 taken government to international and regional courts and in every case, the rights of the farmers to compensation has been upheld and in some cases actual compensation claims have been legally quantified and valued. “In my view, there is little difference between a bankable long term lease and freehold. The compensation to the 4 000 farmers affected will not be less than $10 billion and can only be paid with the support of the international community and will involve the State borrowing the funds under some sort of international guarantee or through the multilaterals.

“If I was on the funding side of the deal I would insist on taking over the freehold title rights and insisting that all settlers pay for the farms they occupy as one way of partly recovering the cost of compensation. I would not recommend doing away with freehold title which is the best way to turn land into a bankable asset,” Cross said.