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The significance of land compensation for rehabilitation of Zimbabwe's
July 02, 2012
This paper is
part of the Zimbabwe
The issue of
compensation has been controversial and still represents an area
of major disagreement between the Government of Zimbabwe (GoZ) and
the dispossessed farmers, mostly as represented by the Commercial
Farmers Union (CFU). In this article I will discuss the nature of
the impasse, and I will review the status, legislation, and prospects
for resolving the issue and accelerating rehabilitation, investment
and productivity. As a general framework for accelerating the rehabilitation
of the land sector in Zimbabwe, a number of important activities
need to be initiated and completed by government and these include:
compensation for land acquired; issuance of legal multi-form tenure
instruments for new land occupiers; and reforming the land administration
system to allow for better land use planning, management and production.
This includes strengthening the dispute resolution systems and requisite
capacity for adjudication.
As for the impasse,
I will argue for pragmatic solutions. Both government and dispossessed
farmers are still experiencing hard times. The government is still
under-funded and many former white farmers have become destitute.
It is highly unlikely that a perfect solution exists for both government
and dispossessed farmers. The time has come for serious proactive
engagement in search of lasting solutions.
experience to date
The Fast Track
Land Reform Program (FTLRP) was introduced in 2000 and the Government
of Zimbabwe (GoZ) amended the legislation to enable compensation
for "improvements only". In all, 125 farmers accepted
the offer before the scheme collapsed because of hyperinflation.
The disagreement between the CFU and GoZ has been largely on valuation.
The CFU maintains that compensation value should include: land;
improvements; interest; and consequential damage. The legal battles
between government and farmers on this issue are well covered elsewhere.
on existing legislation are estimated at between $1.5 and $2 billion.
Valuations along CFU lines are estimated at between $6 and $10 Billion.
The difference is huge and a pragmatic way forward in needed. After
the formation of the Government
of National Unity (GNU) in 2009 the scheme was re-introduced
and since then Budget Vote 31 has had a small but growing allocation.
In the "Blue
Book", Budget Vote 31 is for the Purchase of Land User Rights
(compensation), and allocations are as follows: 2011 (unaudited
expenditure to September) = $2,496,873; 2012 = $6,000,000; 2013
= $9,000,000; 2014 = $12,000,000. According to the Ministry of Lands
and Rural Resettlement (MLRR), a total of 6,422 farms were acquired,
of these 1,250 were valued and 4,962 farms are still to be valued.
To date 210 farmers have been compensated since the FTLRF. Individual
compensation values vary from about $200,000 to $1.2 million. During
this period priority has been given to elderly former farmers over
the age of 70.
Compensation is guided mainly by two acts, the Land Acquisition
Act Chapter 20:10 and Acquisition of Equipment and Materials Act
Chapter 18:23. A valuation report is produced by the MLRR's Valuations
Section and submitted to the Compensation Committee, which is made
up of members appointed by the Minister of Lands and comprises Permanent
Secretaries for Lands, Finance, Local Government, Agriculture and
Labour/Social Services. The committee, according to the Act, determines
the amount of compensation payable to the farmer based on the MLRR's
Valuation Section report.
Section then invites the farmer to conclude the offer. The farmer
may accept or refuse the compensation value offered and has the
option to go to the Administrative Court for resolution on the valuation.
Farmers also have the option of bringing their own valuers to Court.
If an agreement is reached on the compensation value, a contract
is signed and the compensation processed. There are two options
for paying out the compensation:
OPTION 1: the
farmer gets 25% on signing consent forms, 25% payable within a year
and the balance within a 5-year period with interest.
OPTION 2: the
farmer gets a discounted lump sum amount, calculated at 60% of the
total value of the compensation agreed.
of Lands has made several revisions to the regulations to make these
more acceptable to the beneficiary ex-farmers. This includes provision
for a lump sum payment; and provision for the farmer to submit a
schedule of the actual improvements on the date of eviction, and
that schedule can include photography. The outgoing farmer is also
required to fulfill the Farm Workers Gratuity Regulations (S16).
The Minister also amended these for better interpretation.
need for a land acquisition compensation fund
The number of
compensations can grow rapidly if 2 things happen: a) establish
a viable Land Acquisition Compensation Fund; and b) MLRR accelerates
the valuation process. I prefer completing the valuations as soon
as possible because that provides more meaningful targets for the
Fund; and allows for as many agreeable farmers as possible to sign-off
on a compensation plan, thereby providing quittance for allotting
a legal and viable lease to new occupiers. The other urgency is
to provide immediate financial relief to as many former-farmers
as possible. I believe that this is the best we will get in the
foreseeable future for a 'willing-seller-willing-buyer' arrangement
on the matter. There may well be as many who will take up the offer
as those who will not. Ideally it is important for enough prior
('without prejudice' to both side) consultation and analysis to
take place between the CFU, the Valuation Consortium (which represents
the majority of disposed farmers) and the ML RR's Valuation Section.
It is important to minimize the number of disputes that go to court
otherwise that will slow down the process and defeat the whole purpose.
of resolving the issue urgently is imbedded in the legislation that
requires "quittance" on the acquired land before a legal
lease can be issued to the new land occupier. Quittance is contingent
upon compensation, or at least a signed agreement between government
and farmer on the terms. This legal requirement makes it urgent
that a compensation fund is established by the government soonest
to compensate as many farmers as possible on the basis on existing
according to CFU is that farmers in the drier parts of the country
are prejudiced by 'improvements only' valuations. One solution is
to provide for 'supplementary payments' in the Fund for special
cases such as some properties in Matabeleland, Midlands and Masvingo.
The need for
flexibility in paying out compensation: Anecdotal evidence suggests
that there are several permutations out there in terms of the circumstances
that the former white farmers face. For my own argument, however,
I have grouped them into 3:
- Those who
are destitute and/or desperate for financial relief and are willing
to explore compensation on the basis or existing legislation;
- Those not
necessarily desperate but are willing to explore compensation
on the basis or existing legislation - some because they want
closure and need to move on; some to prioritise the time-value
of money and do not mind taking discounted values, and so on;
- Those who
have decided to hold out for 'full' compensation for various combinations
of: land; improvements; interest; and consequential damage.
The fund I am
proposing would therefore cater for categories 1 and 2 for now and
those in 3 would come in later as constitutional and political processes
resolve the issue more definitively. My heart goes out mostly to
those in category 1 because that is the category most other Zimbabweans
are in. A considerable number lost property, assets, and retirement
funds and there is nowhere to turn to for compensation. Estimates
of a global figure representing those losses are just as colossal
as losses by white farmers. It is also politically difficult for
government and donors to invest several billion dollars into a few
thousand white farmers in a country and continent with millions
of poor people. I know that my views here are quite contrary and
unpopular with the CFU and others. But quite frankly the country
needs a more proactive leadership from both government and organized
farmers on this matter. It is better for government and farmers
to face donors with a negotiated posi tion than the current huge
gulf in positions. Without that negotiated position, then we are
left with those in category 3 who should exercise their democratic
right of course; ipso facto, those in categories 1 and 2 should
have the guts to self-organize and proactively work towards a solution.
My take is that
the nation is quite divided on the issue of compensation for land;
on land acquired through the FTLRP this divide cuts across political
party lines, as well as other class lines. Compensation for land
will be accommodated in future constitutions, I believe. It is just
that we are still at a point where compensation for land acquired
through FTLRP is still highly contested politically, with the exceptions
already provided for, including BIPPA land.
for capitalising the fund
In order to
capitalize the Fund, we need as many contributors as possible. No
one group that can take the whole burden - and there is need to
share the burden. I have had opportunity in the last year to discuss
the prospects of a compensation fund with various people and various
groups including government officials, parliamentarians, donors,
and some of the farmers who have explored compensation and/or been
compensated. I have learnt a lot from these discussions and what
I am presenting here is largely from all these rich contributions.
is just an example of how such a fund can be crafted. There are
altogether 5 potential contributors to the fund:
budget: $9 and $12 million earmarked for 2013 and 2014 respectively;
I think government should instead put up say $30 million in 2013
as seed capital; then maintain contributions at that level and
fees from new A2 land occupier: This kicks in when the land has
quittance, and a transferable bankable lease offered to the new
occupier. For argument's sake, the transfer fee could be equivalent
to 30% of 'improvements' acquired by the new occupier; occupiers
can be offered payment plans for the transfer fee payable to the
- Annual ground
rent by A2 lease holder: the lease holder pays annual rent and
that goes into the fund;
- Donors: contribute
to the fund on behalf of A1 land occupiers; for argument's sake
A1 land constitutes 60% of all compensation estimates and this
would translate to say $1 billion; donors could contribute $100
million a year for 10 years into the fund;
and investment banks: capitalize the fund as long term investment
into a viable fund with prospects of converting capital to a future
Land Bank that I will discuss in a later article.
The order of
commitments to the funds will probably be government first, donors
next, then lease holders, and finally development and commercial
banks. The worst case start -up scenario is that the fund only has
$9 million committed by government in 2013. In this case I would
then suggest that negotiations on the thousand or so valuations
completed to date be concluded as soon as possible. If say 500 (50%)
are agreed and signed, then the $13 million is shared among the
500 farmers. The Minister could introduce an Option 3 payment plan
that commits payment of interest on capital for those signed up.
Some farmers are proposing an alternative plan that each farmer
receives a nominal monthly payment of say $1,000 deducted from his/her
capital account and accrued interest. The best-case scenario start-up
is seed funds from government and donors, totalling say $100 million
in 2013, in which case all 3 options for payout can be available
from the start. The fund will grow fast fr om there.
The issue of
compensation is urgent because it is the trigger point for rehabilitation,
investment and productivity. This has to be accompanied by issuance
of appropriate land rights instruments, with a tradable and fundable
99-year lease. A Land Acquisition Compensation Fund could well be
the precursor for re-building the land registry and land administration
system and subsequently a Land Bank that becomes a premier investment
bank for land development for all sectors as the economy builds
up and as the nation attains food security.
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