In a significant move towards resolving a longstanding issue, the African Development Bank (AfDB) has unveiled a financial proposal to expedite the compensation process for white farmers in Zimbabwe. The bank’s President, Akinwumi Adesina, announced on Monday that the AfDB has developed financial instruments to “fast track and front load” $3.5 billion in compensation to white farmers who had their land seized by the Zimbabwean government. This move aims to address one of the most divisive policies of the Robert Mugabe era and restore trust between the government and affected farmers.
The compensation issue originated from Zimbabwe’s land reform program initiated in 2000, which sought to redistribute land from white farmers to Black families. While foreign white farmers were permitted to apply to reclaim seized land, local white farmers were left with limited recourse. Recognising the need for restitution, Zimbabwe agreed in 2020 to compensate the affected local farmers. However, an initial proposal to provide compensation over a 10-year period through treasury bills was rejected by the farmers, citing concerns about the extended timeline.
President Adesina’s proposal comes as part of broader efforts to address Zimbabwe’s external debt arrears and implement crucial reforms. In his role as co-chair of the debt clearance process, Adesina aims to settle $6 billion in external debt arrears while also advocating for reforms in the exchange rate and the central bank, which has been identified as having a quasi-fiscal role contributing to inflationary pressures.
Speaking at a presentation to creditors and the press in Harare, President Adesina emphasised the need to expedite the compensation payments to foster trust and ensure a smoother resolution. The specific details of the proposed financial instruments were not provided during the announcement. However, Adesina assured that the new plan would leverage capital markets to fund the compensation without burdening Zimbabwe with additional debt.
Zimbabwe, burdened with over $14 billion in external debt as of September 2022, has faced significant challenges in securing financing from international institutions like the International Monetary Fund (IMF) due to its outstanding arrears. According to Adesina, a staggering 91% of Zimbabwe’s multilateral debt and 61% of its bilateral debt remains in arrears. Illustratively, over 66% of the current over debt relates to punitive interest rates invoked against the country for defaulting.
Finance Minister Mthuli Ncube emphasised the government’s commitment to the debt resolution process and the implementation of necessary reforms during a press conference held in conjunction with the AfDB’s announcement. The government’s ownership of the debt process signifies a proactive stance in addressing the issue and working towards a comprehensive solution.
The proposed compensation plan for white farmers in Zimbabwe marks a significant step towards resolving a long-standing issue that has created division and hindered the country’s international financial relationships. As the AfDB takes the lead in facilitating the compensation process, there is optimism that this initiative will help restore trust and pave the way for Zimbabwe’s economic recovery and reintegration into the global financial community.