To Compensate or Not to - A Discussion Note

To Compensate or Not to - A Discussion Note

Introduction

On the 29th of July 2020, the Government of Zimbabwe (GoZ) announced that it had finalized a compensation agreement with the former large-scale commercial farmers whose land was compulsorily acquired by government through the Fast Track Land Reform Program (FTLRP) of 2001. In the announcement government clarified that the compensation was for improvements on the farms and not the land.  Government, through the Ministers of Finance and Economic Development, and Lands, Agriculture, Water and Rural Resettlement further issued another public statement on the 31st of August 2020, where it clarified that farms which were on Bilateral Investment Protection and Promotion Agreements (BIPPAs) or Bilateral Investment Treaties (BITs) and previously owned by indigenous (black) Zimbabweans were not part of the global agreement. Instead these would be treated on a case by case basis to either receive compensation for both the value of the land and farm improvements in terms of Section 295, subsections [1] and [2] of the Constitution of Zimbabwe. Government also announced their intention to either compensate or return the farms previously owned by black Zimbabweans to their owners if conditions do permit for the cancellation of existing leases or permits to allow for the previous owners to take back their land.

These announcements by the GoZ have led to a highly charged debate. Even the opposition party has weighed in accusing the ZANU-PF led government of selling out to foreigners and being insincere about land reform. The GoZ’s announcement on the 31st of August potentially fueled these concerns. Government announced possibilities that former farm owners could return to their land. In a statement issued on the 2nd of September 2020, the GoZ corrected that position- only indigenous (read black) Zimbabweans may be considered for resettlement and that land reform is irreversible.  The left has weighed in- Munyaradzi Gwisai of the International Socialist Organisation (ISO) working with Raymond Majongwe, Secretary General of the Progressive Teachers Union of Zimbabwe (PTUZ) are in the process of taking legal action against government. Other progressive scholars have also argued that the compensation deal is capitulation to forces of imperialism. Furthermore, there is another school of thought questioning why large-scale commercial farmers are eligible for support. How about black folks who were removed from their lands since the 1890s?

Others have challenged the timing of the whole deal, asking, where will Zimbabwe get US$3.5 billion to pay these former farmers? Building upon these concerns, others have also asked if these measures do not serve to perpetuate colonially based privileges. In this discussion we explore these arguments and look at the pros and cons of compensation.

Mapping the Debates on Compensation

As already mentioned, there are strong emotions and views on whether the GoZ should compensate former white large-scale commercial farmers. What does the government/country stand to gain by paying US$3.5 billion or rather what would be the cost for non-compensation? We will start off by highlighting the arguments against compensation;

Compensation serves to perpetuate colonially derived privileges

In principle it is wrong to compensate former white large-scale farmers because they gained through an unfair system that marginalized and exploited other groups. From 1890 the then colonial government establish a battery of measures to ensure that white dominated large-scale commercial farming is a success. Measures such as the Hut Tax introduced in 1894, the Maize Control Act of 1934, the Native Land Husbandry Act of 1951, the labour relations on the farms and the different agricultural financing schemes served to give white large-scale commercial farmers an unfair advantage. It was this advantage which enabled them to accumulate and make farm improvements. By compensating them the GoZ will perpetuate inequality.

ZANU-PF is reversing the gains of land reform

Other political parties such as the Movement for Democratic Change – Alliance (MDC-A) and even the Economic Freedom Fighters (EFF) claim that ZANU-PF has adopted a sell-out position. Even Julius Malema, the EFF leader in South Africa weighed in by threatening that President Mnangagwa will not complete his term if he goes ahead with the plans to compensate the former large-scale farmers. He is quoted saying:

It's a sell-out position. The way he (Mnangagwa) is going about it, he is not going to finish his term. That country is swimming in a pool of poverty; they can't afford basic things like primary health, proper education and infrastructure. He gets money and goes to give it to people who are not deserving. He is reversing the gains of the revolution struggle. It's unsustainable.

In a press statement, the MDC-A’s spokesperson raised the need to ensure that former farm workers are considered in the deal.

ZANU-PF was never sincere about land reform

Other analysts have observed that fast track land reform was a result of a land occupation movement led by war veterans and chiefs which at times clashed even with elite elements within ZANU-PF. This land movement was then co-opted to serve ZANU-PF’s re-election agenda. The unravelling compensation serves to demonstrate that ZANU-PF was never sincere about land reform. Besides the re-election agenda, ZANU-PF based elites abused land reform by acquiring more than one farm each and abusing the different government led subsidy schemes.

Wrong Timing

How can government even be contemplating paying farmers given the condition of the economy and deplorable social service delivery.  Those arguing along these lines think that government’s prioritizing is at fault. The GoZ should be focusing on ensuring improved social service delivery (given the COVID-19 pandemic), improving financing towards agriculture and kick-starting the economy. For the record, the economy has lost more jobs than it has created since August 2018 and also social service delivery (especially health delivery) has collapsed.

The compensation deal is subject to abuse by ZANU-PF elites

Other commentators have raised the concern that this process maybe be abused by politically connected elites as we have seen with many other government led schemes. The current agreement does not have specific details on who will benefit. The database on valuated farms and amounts to be compensated per farm have not been communicated.

Some former white farmers have already been compensated

Soon after fast track, a number of white farmers (approximately 800 in total) moved to Mozambique, Zambia and even Nigeria. They were supported by funds from the Department for International Development (DFID)[1] and the United States Agency for International Development (USAID). They received support to lease land and also to settle. Others are questioning if farmers like these who have already been resettled elsewhere should also be part of the compensation package.

Who will actually pay the compensation?

There is no clarity on who should actually pay compensation. A skit[2] by BUSTOP TV (a comedy/satire channel) with support from Zimbabwe Coalition on Debt and Development (ZIMCODD) (a local NGO) raises pertinent questions about who is expected to pay the compensation bill. Will it be Zimbabwean taxpayers? The GoZ has not adequately explained the modalities of repayment except to say that they are looking for experts to lead the process.

Why are we only focusing on compensating former white commercial farmers?

Others have raised the need for GoZ to consider other groups that also suffered from fast track. At its peak, the large-scale commercial farming sector employed closed to 350,000 farmworkers on a full-time basis. The proposed compensation should not only benefit former farm owners especially given the Master-Servant labour relations that existed on the farms. It is further argued that these former farm workers were the actual creators of value and should be adequately compensated as well. The financial services sector which was responsible for lending to these former white farmers was also significantly affected by land reform. The compensation package should also consider including these actors.

Compensation will negatively affect regional efforts for Land Reform

Others have raised the fear that if Zimbabwe goes ahead with compensation it will negatively affect prospects for compulsory land reform. South Africa and Namibia are engaged in on and off efforts to resolve their own land questions and the signal from Zimbabwe to pay compensation may dampen the mood for such a policy move.

Justification for Compensation

There are equally several good arguments in favour of paying compensation to former farm owners:

Compensation for farm improvements is not new 

The GoZ has since 2005, been engaged in dialogue with former white farm owners through their respective unions and where consensus was achieved some were paid. Table 1 provides a breakdown of progress that had been made by 2006:

Progress towards Compensation No. of Farms % of Farms
Farms valued for compensation (August 2005) 3 380 43%
Farms confirmed in the Administrative Courts (as of September 2005) 1 174 15%
Farms on which compensation agreed, fully or partially paid for 206 3%
Farms not yet valued for compensation 3 102 39%
Total farms gazetted 7 862 100%

Table 1: Compensation on Fixed Improvements

 Source: World Bank, (2006) also see Murisa (2019) https://www.sivioinstitute.org/wp-content/uploads/2019/05/To-Compensate-or-Not-To.pdf

 Compensation can potentially improve prospects for Re-Engagement

Zimbabwe is currently locked out of international financial circuits for two reasons: defaulting on loans and also through sanctions. The United States’ Zimbabwe Democracy and Economic Recovery Amendment (ZIDERA) Act of 2018 has identified the FTLRP as one of the major issues that has to be addressed before the sanctions are lifted. It states that:

It is the sense of Congress that the Government of Zimbabwe and the Southern African Development Community (SADC) should enforce the SADC tribunal rulings from 2007 to 2010, including 18 disputes involving employment, commercial, and human rights cases surrounding dispossessed Zimbabwean commercial farmers and agricultural companies (ZIDERA Act of 2018).

Through ZIDERA (2018), [passed before the 31 July 2018 elections]  the United States government and its allies are effectively demanding that the Zimbabwean government respect/honor the claims being made by the former white large-scale commercial farmers on its own before any form of re-engagement can take place. The full impact of sanctions on the broader economy has not been adequately examined. There is reason to believe that these sanctions have played a huge role in the economic meltdown. ZIDERA enshrined into law the United States stance that funding from the Bretton Woods Institutions (i.e. the International Monetary Fund and World Bank) could not be reinstated until the Act was lifted.

Compensation potentially resolves existing judgement against the FTLRP

The compensation package potentially provides an avenue for the GoZ to escape all the judgements made against the seizure of land. The rulings mentioned above claimed that Zimbabwe’s land reform was illegal. The tribunal demanded the government pay compensation to dispossessed white farmers. The sum for what these claims would cost has been estimated at $30 billion.

Compensation will open the way for the GoZ to finalize outstanding land tenure issues

Although the government has introduced leases (for A2 beneficiaries) and permits (for A1 beneficiaries) only a few have been issued to the resettled farmers. Most of the resettled farmers only have offer letters which are very insecure. The compensation will, if all former farmers accept the deal,  resolve the contestations on the land and allow for government to fully take over ownership, extinguish the titles that existed on the land and proceed to offer the leases and permits to land reform beneficiaries.

Compensation for BIPPA Farms is the right thing to do

Many have recognised that BIPPAs were signed after independence and are not a colonial obligation. In the majority of cases the GoZ was a party to these agreements. If the GoZ entered an obligation in good faith, why should it renege on that commitment when the funds were made available to enhance production? Besides, an export-led agriculture model requires that Zimbabwe enter into trade agreements with other countries and its lack of movement on this will further constrain potential to attract new financing opportunities.

Tentative Next Steps

The above contours of arguing can be further split into concerns about; (i) total opposition to compensation, because it perpetuates colonially established wealth hierarchies and serves to reverse the land reform program, (ii) yes to compensation but is this the right time to do it and who should actually pay for it, (iii) yes to compensation. There is rarely a common ground when it comes to Zimbabwe’s land question. However, there are certain measures that could contribute towards establishment of a consensus or common ground. Here we suggest some of those measures:

A New Dialogue on outstanding Land Reform Issues

Dialogue on land policy is inadequate. Policy making remains the domain of government with limited input from other stakeholders. However, this has not been the norm- in the years soon after fast track the GoZ’s Ministry of Lands and Resettlement worked with farmers’ unions, farm workers and a number of think-tanks to develop common positions on policy. Instruments such as the lease and permit were robustly debated in platforms established by civil society organisations. However, the current approach is very narrow and limits opportunities for coproduction in policy formulation. It potentially contributes to further polarization and suspicion. A policy position on compensation especially where government intends to spend US$3.5 billion requires broader consultation and consensus building. The proposed dialogue should be composed of inclusive platforms focused on answering questions such as,

  • How do we effectively resolve outstanding issues to do with land reform?
  • How do we ensure the process of distribution outcomes contribute towards national harmony and deliver towards economic goals?

Beyond Land, Towards National Development

Government’s previous mantra that ‘the land is the economy and the economy is land’ aptly clarifies the extent to which land policy (tenure, distribution and utilisation) affect (hinder/promote) achievement of broader development goals. The proposed compensation deal should be understood within the broader framework of economic and social development. How do we ensure that:

  • the country can chart a new path of development given the dominance of agriculture
  • we re-engage with the international community given the prioritization of the sanctity of property rights
  • we unlock the value of land for national development- inclusive of national food self-sufficiency and regain export markets for the generation of foreign currency.

The main question to pose is then ‘what the role of compensation will be to achieve the above?’ We should quickly highlight that compensation is not the proverbial silver bullet. There are still a number of outstanding policy measures required to resolve problems in agriculture starting with addressing the problem of multiple-farm ownership and improved targeting of agriculture subsidy packages.

Broaden the Compensation Options

Land reform was not necessarily about removing white farmers but instead it was about deracializing land ownership patterns and altering farm sizes to accommodate many others who would be farmers. Former white large-scale commercial farm owners should be allowed to choose between taking the compensation deal or being resettled on resized farms. In many dialogues hosted by the then AIAS (now SMAIAS) the issue of the brain drain out of the farms was raised. The compensation deal could offer an opportunity to accommodate former white farmers. Many of these former white farmers are Zimbabweans and they have not left.

Develop an Instrument to mobilize resources for compensation

It is probable that the discussion we are having on whether to compensate or not to has already been settled by government -they are going ahead with compensation unless maybe there is a legal challenge to it. The question then becomes, how do we compensate? There are many ways of ensuring that the proposed compensation package does not create a new national debt burden. Way back in 1991 the World Bank had recommended the introduction of a land tax because, according to empirical studies, the majority of commercial farmers were only using at least one-third of their farms. The same applies today. Underutilisation of land is a common trend across all models. The establishment of a land tax will create efficiencies in the utilisation of land. The land tax can be complimented by the establishment of a land bank. All the nationalised agricultural land will be owned by the proposed land bank and it will collect rentals in the forms of leases and permits. The GoZ can, through the proposed land bank, issue a bond to raise resources and pay off the farmers.

Include former farm workers in the deal

Zimbabwe’s land reform did not follow the usual pattern- where farm workers (tillers of the land) become the major beneficiaries of redistributed land. Instead former farm workers only constitute 8% of the land reform beneficiaries. The majority of the farm workers were never paid severance packages by their former employers, they live in poverty and some of them were absorbed by the new farmers. It will be a travesty of justice if they are excluded from this deal.

[1] DFID has now merged with the Foreign and Commonwealth Office (FCO) to create the Foreign, Commonwealth and Development Office.

[2] https://www.facebook.com/BUSTOPTV/videos/350804109258163