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Zimbabwe debt clearance tied to farmers' compensation and credible polls

by Zeenat Hansrod
22 May 2023 at 06:40hrs | Views
THE African Development Bank has moved to fast-track Zimbabwe's $3.5 billion compensation to white farmers whose land was seized under former president Robert Mugabe's reforms. The bank is leading efforts to clear Zimbabwe's crippling debts.

"A revived Zimbabwe is good for Africa. A revived Zimbabwe is good for the world," said Akinwumi Adesina, president of the African Development Bank (AfDB) at a debt resolution forum held this week in the capital Harare.

The AfDB is co-chairing a process aimed at clearing the country's $6 billion of external debt arrears that also includes reforms to the exchange rate and central bank.

"Zimbabwe cannot run up the hill of economic recovery carrying a backpack of debt on its back," Adesina said.

He added that Zimbabwe's combined $8.3 billion debt was overwhelmingly in arrears. On top of this, Zimbabwe owes international creditors $14 billion.

"The debt itself is not as debilitating as the arrears on the debt since the country cannot access international concessional financing, or other revenue, or less expensive financing to pay down its debt obligations," explained Adesina.

Without the support of international backers, Zimbabwe is struggling to secure new credit lines and attract foreign investment to revive its economy.

The country has not been able to secure financing from the likes of the International Monetary Fund in over two decades due to its arrears.

Compensation for expropriated white farmers is one of the conditions set by the country's main creditors for accepting a debt arrears clearance program.

$3.5 billion for white farmers

The AfDB is working with Zimbabwe to develop innovative financial instruments and structures that can be used to mobilise $3.5 billion for compensations to white farmers, without getting into further debt.

"It is important that we find a mechanism to try to fast-track the payment of these compensations. Further delay will cause lack of trust," the AfDB president added.

Early this year, commercial farmers rejected the government's proposal to compensate them through treasury bills over a period of 10 years.

In July 2020, Zimbabwe's President, Emmerson Mnangagwa, and the president of the Commercial Farmers Union of Zimbabwe, Andrew Pascoe, signed an agreement to compensate the white farmers to the tune of $3.5 billion.

Those to be compensated are some 4,500 white landowners evicted from their lands in the 2000s as part of a violent and controversial land reform initiated by former president Robert Mugabe.

Adesina commended the government for its decision to make land titles available to enhance the security of commercial farmland.

"These would be for 99-year leases which are also commercially viable, bankable, and transferable," he said.

July elections

The success of the efforts we have put into this process will depend on what happens with the upcoming presidential elections [due in July 2023]," Adesina said.

He is working with the facilitator of the high-level dialogues, former President of Mozambique Joaquim Chissano, in leading efforst to help Zimbabwe re-engage with the West.

Chissano said that free and fair elections and settling the issue of compensation for white farmers are key in advancing dialogue with the West and financial institutions.

"The people of Zimbabwe and the international community will be watching very closely. The full weight of re-engagement with the international community will not just depend on the election, but on the entire electoral process that guarantees a credible election," said Adesina.

In May AfDB chief and Chissano met with leaders in the US Congress, Treasury Department, State Department and other US agencies to discuss Zimbabwe.

"The crisis in the country is having terrible consequences for the region as Zimbabwe lies at the heart of southern Africa," Chissano said.

Zimbabwe is the gateway into southern Africa and regions further north for goods and services from South Africa.

Road infrastructure linking the region via Zimbabwe has played an important role for free trade.

Source - RFI