Politics
Zimbabwe could be facing a $30 billion bill to compensate white farmers whose land was expropriated and redistributed starting in 2000, local media reported on Thursday. This staggering amount -- triple the country's GDP -- is far more than the $10 billion of earlier estimates and the very conservative $2-4 billion that the government had projected.
There's no way that cash-strapped Zimbabwe, whose shrinking economy won't turn around anytime soon, could afford such a bill, even over a long pay-out time. In terms of credit, Finance Minister Patrick Chinamasa said on Thursday, “Right now we literally have nothing, so to speak.” Zimbabwe owes $10 billion to the IMF, World Bank, and the African Development Bank. Of that only the private sector’s portion ($2 billion) is being serviced; by contrast, the government is in way over its head. Harare has resorted to imposing restrictions on imports, mainly from neighboring South Africa, to protect local industries and stem an outflow of scarce dollars. And the country’s indigenisation law – under which companies must give away 51% of their ownership to empower indigenous Zimbabweans – continues to stifle FDI and hamstring the economy.
The state took ownership of the approximately 4,000 white farmers’ land, and it leased parcels to black farmers. But the state retains ownership and can take back the land at any time, making banks reluctant to take the leases as collateral for lending. This also means that agriculture is the least attractive sector for both domestic and foreign investment, which is “a crying shame,” said Zimbabwe Investment Authority chairman Nigel Chanakira on Thursday.
But the government has agreed in theory to compensate the dispossessed farmers, as part of a program to reintegrate Zimbabwe back into the international community. Harare recently announced plans for a special fund to raise and administer the payment of compensation to the farmers, but that is hardly a priority when the government has much bigger fiscal worries. More likely the state will try to use legal loopholes to exclude many claimants and thus bring down the ultimate bill.
Under the new Constitution adopted in 2013, not all dispossessed farmers would be entitled to land compensation. Those who are not indigenous Zimbabwean (meaning black) and whose land was not protected under an agreement by Harare with another government, are entitled to state compensation only for improvements that were on the land when it was acquired, not the actual land itself. These improvements, whether fixed or movable (like livestock, crops, and tractors), comprise a huge portion of the $30 billion estimated bill, as much as two-thirds. Naturally, the white farmers are vehemently opposed to this approach, and are fighting for full compensation in the courts, with some cases-by-case successes in being granted favorable rulings. Getting Harare to actually pay is another thing entirely, with very little to show for it.
However, if the state compensates the dispossessed white farmers to a decent degree, and gives the current lessees title to their parcels, Zimbabwe’s agricultural sector could be ripe for a revival. It won’t happen anytime soon, though.
