Farm Compensation in Zimbabwe

On the 16th March 2016, the Minister of Finance in Zimbabwe tabled a memorandum in Parliament establishing a special Fund to raise and administer the payment of compensation to owners of land held in Zimbabwe under freehold tenure. The paper implied that compensation would be for four items:

1. The land itself;
2. Immovable property and improvements;
3. Movable property taken over at the time of acquisition; and
4. Any legal fees incurred.

Claims for compensation arise out of an exercise launched in June 2000 which has subsequently become known as the “Fast Track Land Reform Programme”.

Background

At Independence in 1980, agricultural land was divided almost equally between commercial agriculture and the “Tribal” or communally occupied land. Between the two classes of tenure some 32 million hectares of land were settled. The commercial or freehold tenure land was occupied by approximately 6 000 large scale commercial farmers on 12 million hectares and 4 million hectares occupied by agribusiness ventures and conservancies. A part of the commercial farm system was in the form of small scale commercial settlements with some 25 000 black farmers holding about 250 hectares each.

In the immediate post Independence era some 4 million hectares of commercial farm land was acquired by the State using funds provided by the international community and paid for at prices determined largely by market forces. When it was discovered that land acquired was not being properly settled and was in fact being parceled out to politically linked individuals, the international community stopped providing funds and the programme was suspended.

Nothing further was done about land reform until the late 90’s when the UN sponsored a land conference in Harare the outcome of which, if implemented, would have taken another 5 million hectares of land for settlement. This was to be on the same basis as earlier acquisitions but with strict criteria for settlement.

Nothing was done about this agreement and instead the Government launched its own “fast track programme” in mid 2000. In a period of 15 years some 4 800 white farmers and many black commercial farmers have been forcibly evicted from their farms and legislation has been passed that has essentially taken over all land held under freehold tenure at Independence – about 12 million hectares in all. The farmers directly affected by the programme occupied 7 million hectares leaving about a million hectares still under the control and management of their original owners and technically holding what has become known as “Offer Letters” which are now being translated into 99 year leases.

The 4 million hectares under agribusiness control and the conservancies (wild life areas linked to tourism) have been largely left alone.

Compensation

When the farm invasions started the Commercial Farmers Union instituted a computer based registry of all farms being taken over and recording what assets and other aspects were involved. This registry is managed by a consortium of valuation companies and called the Valuation Consortium or Valcon.

Today about 90 per cent of all the farms taken over by the State are listed on this registry which includes a complete record of the actual takeover, the farm boundaries and all improvements as well as any other assets taken over. Satellite images exist of every property over the whole period to monitor what has happened since take over. The purpose of this registry is to provide support for individual claims for compensation.

Legally the State has always accepted that they had to pay compensation to the owners for the title deeds. The only question was how much and on what basis and when. Since 2000 the legal rights of the farm owners has been examined and tested in Courts of Law all over the world and in the region. In every case the rights of the farmers to compensation has been upheld and in several key instances actual compensation claims have been legally quantified and valued.

To date about 3 per cent of the land owners affected or about 200 individual farm owners, have accepted the compensation offered by the State and have relinquished their rights to any further claims. The compensation paid in these instances amounted to about 10 per cent of the value of the properties. The remaining land owners have not accepted compensation on this basis and this is the issue that is now confronting the Zimbabwe Government.

If we isolate the claims of the 4800 farmers who have had their farms taken from them, the claims cover roughly 7 million hectares and the estimated discounted, replacement value of those properties in terms of items number 1 and 2 above is $11,4 billion - $8,6 billion for immovable assets and $2,8 billion in land at today’s values.

If we use the basis of claims set by legal precedent in Europe and South Africa, then the total theoretical claim rises to double this figure or more and includes elements such as damages, lost income and interest from the date of acquisition.

Several other difficulties present themselves and will have to be agreed and settled before we can say that closure has been achieved. These are:

- What to do with those farmers who have already had compensation determined by the Courts and how to avoid the inevitable precedence influence on all other claims;
- Theoretically all freehold land has been acquired and so any land owner who currently occupies his own property and has been given a 99 year lease by the State, has to pay a lease to the State every month. Such land owners have the right to claim compensation and to thereby relinquish their land rights to the State or to claim just the value of the land as this was a balance sheet item before the land reform exercise; and
- What about interest on any claims? Even at international interest rates of 5 to 6 per cent per annum, this would have the effect of almost doubling farmer claims.

Payment of Claims

Once the quantum of each claim has been established and accepted (two separate issues) then the matter of how to pay such claims will arise. Clearly there is simply no capacity in Zimbabwe to settle this matter either now or in the near future. The land is occupied by 150 000 small scale farmers (A1 settlers) and 18 000 large scale farmers or A2 settlers. None of these has any form of secure title and there is no market for agricultural land in Zimbabwe at the moment.

If the State insists on regularizing these new land units under the control of the settlers and issues them with 99 year leases that are not transferable or disposable on a free open market then the land simply cannot be used as collateral. The revenues from these leases and other forms of revenue being implemented right now (they were in the 2016 budget) will not generate significant income and cannot be expected to make any significant contribution to the compensation payout required.

If, on the other hand the State restores title rights and demands that settlers pay for their land and these funds are then used to pay compensation, then it is likely that the compensation process might be self liquidating. However the majority of settlers are likely to abandon their claims to land in such circumstances and this then would raise the issue of just what to do with the land and how to bring it back into production.

From start to finish, the Fast Track land Reform Programme” has been illegal, racist, chaotic and violent. Over 80 per cent of all the farmers affected purchased their farms for cash at market values after Independence and with a certificate issued by the Government stating that the land in question was not required for resettlement. They were in fact the one community that invested heavily in the new Zimbabwe on a continuous basis right up to the year 2000.

Compensation at real market values is not only a legal obligation on the Government of Zimbabwe, it’s a moral obligation and the affected communities have the right to demand justice. What is tragic is that so few elsewhere in the world are in support of this community of investors in this blighted African country. Another tragedy is that all Zimbabweans have paid the price of this State driven delinquency over the past 16 years and we continue to do so.

E G Cross
Bulawayo, 21st March 2016