AN EXPLANATION OF THE PROPOSED COMPENSATION AGREEMENT BETWEEN THE GOVERNMENT OF ZIMBABWE AND REPRESENTATIVES OF COMMERCIAL FARMERS
- After months of engagement, the Government of Zimbabwe (GoZ) and three organisations (the CFU, SACFA and Valcon (Pvt) Ltd) representing the interests of commercial farmers, have reached an agreement, in principle, regarding compensation for improvements on farms affected by the Fast Track Land Reform Program and included in ValCon’s data base of such farms.
- Under the proposed agreement, the GoZ is offering a global figure of USD3 500 000 000 (three and a half billion United States Dollars) to pay for those improvements (which include biological assets and land clearing costs) on the farms the GoZ acquired under the land reform programme. The intention is that the funds will be raised through a loan or loans to Zimbabwe from external agencies. A Technical Committee will be appointed by the Minister of Finance consisting of representatives of the GoZ and farmers to source this funding. In this regard, preliminary engagements have already started with International agencies. If this process is successful, the funding will be made available within 12 months of the date of signature of the agreement. If this process is not successful we have the right to withdraw from this agreement.
- The overall valuation agreed between GoZ and ValCon (Pvt) Ltd for improvements on the farms on ValCon’s database was USD5.2 billion. The GoZ began by offering a compensation figure of USD1.2 billion. After much negotiation it became clear that GoZ would go no further than a figure of USD3.5 billion. It was agreed that farmer representatives would present that figure to individual farmers for their approval or otherwise. This final figure represents a discount of about 30% on ValCon’s overall total for improvements, but it is still nearly three times the GoZ’s initial offer.
- This agreement does NOT include the value of the land. The GoZ, in terms of the 2013 Constitution, is not legally obliged to pay compensation for the land itself. However, it has noted ValCon’s overall valuation of the land at USD3.2 billion, in as much as it said that it has no reason to dispute the methodology for calculation of the land value. This approval will be important when farmers’ representatives seek funding from outside Zimbabwe in respect of the land. This will be explained in more detail later (see Para 13).
- This figure (USD 3.5 billion) represents about 42% of the composite valuations made by ValCon for improvements and land (being USD 5.2 billion for all improvements, plus USD 3.2 billion for the land), but represents 67.3% of the value of the improvements only.
- There is a great variation in the land/improvements valuations in different parts of the country. The primary value of a ranch, for example, comes from the land itself, whereas the main value of a unit that is intensively farmed will most likely be in respect of the improvements.
- In order to be fair to farmers from all parts of the country and to ensure that farms with similar total values, for improvements and land itself from wherever they operate, receive a a fair distribution of the available funding, the funds will be shared by ALL claimants pro rata, in accordance with the value of their individual combined improvements and land. This will ensure that each farmer receives a fair and proportionate amount of such funds as are made available.
- The CFU/SACFA and Valcon will be responsible for calculating the allocations to each individual farmer.
- Individual estimates of these allocations will be sent by Valcon shortly after this explanation together with a digitised referendum form for individuals to accept or reject this initiative.
- Under the terms of this proposed agreement, at least 50% of the USD 3.5 billion will be paid within 12 months of the representative parties signing the contract. The remainder will be disbursed at the rate of a quarter of the balance per year for the next four years. Should the funding of USD 3.5 billion be available as one disbursement then the 5 year staged payments will fall away and be replaced by a one off payment.
- The money, in US dollars, will be paid into the proven claimant’s individual bank account of their choice.
- Where any farmer has accepted interim relief in local currency, or has previously accepted a sum in as compensation for improvements, that farmer is not precluded from benefitting under this agreement, even if the previous compensation was accepted in “full and final settlement”. All that happens is that anything previously paid will be deducted from what would be due under this agreement. In the case of interim relief paid in local currency, what was received will be deducted at the bank rate as at the date of receipt of the interim payment.
- The terms and conditions of the funding for land remain to be established. What is proposed is that a team of farmers’ representatives will approach relevant foreign governments and institutions and attempt to raise as much funding as possible in respect of the value of the land. Whether this will be in the form of cash payable directly to the farmers, or in some other form, remains to be seen. These farmer representatives will be appointed to the Joint Resource Mobilisation Committee (JRMC) which will be consulting to the ROAD MAP envisaged for Zimbabwe’s recovery in tandem with International Institutions.
- The signing of this agreement by the GoZ and Farmer Representatives will not bind individual farmers until a deed of accession is signed by the farmer. Each Farmer will have up to nine months from the date of the signing of the agreement, to choose whether or not to participate.
- It must be stressed that no farmer is compelled to take compensation for improvements in terms of this agreement. Any farmer who considers that the compensation is inadequate may pursue his or her claim through the courts or in terms of the Land Acquisition Act. In the event the GoZ defaults, then the agreement becomes NULL and VOID.
- This offer is only open to those registered with Valcon.
- In terms of the Constitution, indigenous farmers and BIPPA farmers are entitled to compensation for both land and improvements. Again, any farmer who wishes to seek full compensation under the Land Acquisition Act, on the basis that he or she is indigenous or a BIPPA farmer (in respect of which he or she may seek his or her own legal advice), is free to do so. Until otherwise notified, those who are in either of the above classes will remain Valcon clients as far as this agreement is concerned and will be dealt with in the same way as all other clients,ie, values based on improvements only
- Any farmer who receives full payment in terms of the proposed agreement irrevocably waives any claim against the GoZ for further compensation, in accordance with the GoZ’s constitutional obligations.
- It will not be necessary to surrender original title deeds for this purpose. Certified copies will be adequate. You will be advised in more detail of the precise requirement
- You are also reminded that ValCon (Pvt) Ltd will be due a contractual commission/fee (no more than 3.15%) for its services pro rata your payments.
- This explanation is intended to inform you of the broad content of the proposed agreement.
- DISCLAIMER: Whereas The CFU, SACFA, and ValCon (Pvt) Ltd, through their jointly mandated Compensation Steering Committee, have engaged the Government of Zimbabwe in good faith and to the very best of their ability over an extended period, none of the above Farmer representative bodies, nor any member of them, can be held responsible in the event of any failures of this proposed agreement.
- Should you wish to view the final agreement before voting, a copy will be made available at the CFU offices in Harare, from early next week. Due to the extreme sensitivity of this document we cannot distribute it in any form.