Zimbabwe to Pay $331 Million to White Former Farmers as Part of Debt Restructuring Plan

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HARARE,– Zimbabwe has announced plans to pay $331 million to white former farmers whose land was seized during the controversial land reform programme of 2000. The compensation is part of efforts to unlock international debt restructuring agreements and restore access to global capital markets after more than two decades of isolation.

The government has identified 439 former landowners as eligible for the settlement, African Development Bank (AfDB) President Akinwumi Adesina revealed at a debt conference held in Harare on Monday. The payments, which will be made over an undisclosed time frame, are intended to build trust with creditors and demonstrate Zimbabwe’s commitment to economic and governance reforms.

Zimbabwe has allocated $35 million in its 2024 budget to kickstart the compensation process. “The debt will be paid via bonds,” Adesina said.

Debt Burden and Creditor Talks

Zimbabwe’s debt currently stands at $21 billion, of which a significant portion is in arrears. The inability to service its debt has barred the country from accessing loans from institutions such as the International Monetary Fund (IMF) and the World Bank, forcing it to rely heavily on the central bank for financing.

“No one, no matter how strong, can run up a hill with a backpack of sand on their back,” Adesina said, describing Zimbabwe’s debt burden. “Zimbabwe is too critical for the world to ignore.”

President Emmerson Mnangagwa enlisted Adesina and former Mozambican President Joaquim Chissano in 2022 to mediate negotiations with creditors, including the World Bank, Paris Club, European Investment Bank, and the AfDB. In October, Zimbabwe hired advisory firms Global Sovereign Advisory and Kepler-Karst to assist with its debt restructuring process.

Broader Implications for Debt Relief

Zimbabwe’s debt restructuring efforts have gained international attention, with Adesina emphasising the importance of resolving the issue for both the nation and the region. He highlighted the potential use of the AfDB’s African Development Fund, which has been deployed in the past to assist debt-distressed nations such as Sudan and Somalia.

“We must play our part to correct this anomaly by giving a new lease of life to this nation and its people,” Adesina said.

The compensation to former farmers is part of a broader strategy that includes negotiating a Staff Monitored Program (SMP) with the IMF, which would help Zimbabwe demonstrate adherence to sound economic policies. While the SMP does not include financial assistance, it is seen as a key step toward restoring international confidence.

Challenges Ahead

Despite these efforts, analysts caution that Zimbabwe faces significant hurdles in achieving a comprehensive debt resolution. The bulk of its $21 billion debt is arrears, making the path to securing new loans or investments particularly challenging.

By addressing historical grievances through initiatives such as compensating displaced farmers, the government hopes to signal its commitment to reforms. However, the process will require substantial political will, as well as sustained economic adjustments to ensure long-term viability.

The stakes are high for Zimbabwe, which aims to re-enter international capital markets and stabilise its economy. For now, the compensation plan marks a critical step in a long journey toward economic recovery and reintegration into the global financial system.