Zim almost ready to compensate white farmers

Source: Zim almost ready to compensate white farmers | Sunday Mail (Business)

Business Reporter

Zimbabwe has made significant progress in its efforts to compensate white former farmers with valuations having been carried out for nine of the 10 provinces.

Government is of the view that dealing with the twin issues of farmer compensations and 99-year leases simultaneously is critical for the country to be able to securitise its land assets.

Finance and Economic Development Minister Mthuli Ncube told a breakfast meeting to review the 2019 Monetary Policy Statement that he was currently seized with the issue of compensating white former commercial farmers, describing the issue as “a bigger elephant in the room.”

“I must say that is an issue that I am currently seized with and I am very pleased to say that we as Government have made a lot of progress,” said Minister Ncube.

“First of all, the farmers themselves have made a lot of progress as they now have a figure of what they want to be compensated for improvements. And on our side as Government we have done valuations for nine provinces and we know the values of the improvements and we are using the same methodology. So we have covered nine provinces and what’s left is Mashonaland East, which we have run up to around 70 percent. We should be able to conclude the evaluations by end of March.

Section 295(1) of the Constitution stipulates that compensation for acquired agricultural land will be by done by the State.

And in the 2019 National Budget, Minister Ncube set aside US$53 million towards compensation for farmers displaced following the land reform programme.

He, however, admitted that Zimbabwe does not have the capacity to finance the compensation bill which runs into billions of dollars and the US$53 million was just to show commitment to this obligation. “In the agricultural sector we have created a dead asset in the form of land, and we need to turn it into a productive asset. It has two sources of value, there is intrinsic value of the asset itself and then there is the productive value in terms of what you plant.

“One of the issues that needs to be dealt with is the issue of 99-year leases, there are still some work to do to close that off. That needs to be sorted because without 99-year leases we can’t create enough cover in terms of property rights for banks to extend credit to farmers on the back of the 99-year leases,” said the Finance Minister.

All things being equal, the new 99-year leases should have the same tradeability as previous title deeds for commercial farms, which will allow them to be negotiable on the land market.

Although the Government has since announced significant improvements on the 99-year leases to enhance the security of tenure of the lease and making it bankable and transferable, their use appears to have been hindered by the lack of an effective land market, which will ensure that banks can easily trade the title deeds to recover loans in case of defaults.