On the day Zimbabwe lost the life of Lands, Agriculture and Rural Resettlement Minister Retired Chief Air Marshall Perrance Shiri a historic compensation package for displaced commercial farmers was signed on his behalf by Finance Minister Professor Mthuli Ncube. The deal agrees on compensation packages for improvements made on farms by the farmers who were displaced in the early 2000s to make way for the land redistribution program.
Zimbabwe has since the displacement of these commercial farmers not had the best of relations with the international community at large. Economic malaise not helping the situation of the nation as agriculture in the country has taken a hit it is yet to recover from nearly every 20 years later. The Zimbabwean government has spent 2 years and change working on this deal and have pinned their Hope’s of getting back into good books with Western governments and the International Financial Institutions they weild much influence over.
Finance minister Professor Mthuli Ncube said in an interview with ZTN that the process would take about a year to complete compensation to all the farmers that are party to the agreement. The deal which is worth ZWL$268 billion (at the current auction rate) has brought up the question of its financing. Reports are that the money will be borrowed. Borrowed through a 30 year bond on the international market which has left many questioning the ability of the government to afford the deal. It seems at this point it is a deal the government could not afford to decline.
With Zimbabwe’s track record of debt arrears with International Institutions and an economy that is in perpetual freefall raising any sort of debt will be very expensive because of the risk involved with lending to Zimbabwe. Ultimately the burden of this deal and meeting it’s likely steep repayments will fall on taxpayers who are already taxed to death by any measure. Perhaps a return to austerity measures but 30 years of them. The finance Minister also claimed this would unlock funding for agriculture but it was not clear how this would be achieved.
While Zimbabwe has many problems bedeviling its economy one we have noted time and time again is a spotty record with enforcing contracts. In fact it is consistently our worst performing area on the World Bank Ease of Doing Business Report. Moves such as the signing of this important compensation deal and the fulfillment of it will go a long way towards cleaning up that record though it may take a lot more than a deal that can be looked at as being 20 years late to fix that record.