Zimbabwe’s charged land compensation issue

It’s been 16 years since Robert Mugabe’s government began forcing white farmers off Zimbabwean land. But this knotty history is still at the heart of a financial and emotional investment conundrum surrounding farmland risk, regulation and politics in the country.

In March, Zimbabwe’s government publicly promised to compensate white farmers who lost their land titles during the fast-track reforms that began in the early 2000s. Officially, land redistribution reform was wound up in February.

Land leases are becoming available and the government has indicated it wants to normalise relations with the international financial community. Some investors familiar with Africa are “circling”, in one investor’s words, waiting for a moment of opportunity in a country once known as Africa’s bread basket, which is now a net food importer.

However, whether Zimbabwe can make good on its promises now it has made them could have implications for its risk profile and investment environment for years to come.

The IMF, to which Zimbabwe is also in debt, visited in March to assist the country making repayment plans. The promise to repay white farmers coming at the same time seems no coincidence. Blazing in the minds of many investors will still be the issue of land reforms, an emotionally charged example of investor risk.

There was, and still is, a deep sense of injustice on all sides when it comes to the history of land ownership in Zimbabwe. Indigenous Zimbabweans faced years of rule by a white landowning minority. During land reforms, white farmers in some regions faced intimidation and in some cases were killed.

When Mugabe’s government implemented a land reform and redistribution programme in 2000, it was widely reported that many land re-allocations depended as much on individuals’ political connections as on their needs. Added to hyperinflation, a clear shift in Zimbabwe’s position from a net agricultural exporter to an importer and soaring unemployment created scorching risk levels that meant foreign investment almost entirely dried up.

We are in the second week of April and the state is still silent on what form compensation might take, or when it could happen. Sources with government contacts say that Zimbabwe will try to recompense farmers not for their old land titles, but for the improvements made on the land while it was in their care. It would make sense from a local perspective, where there will be limited popular support for any package that agrees white farmers had the right to own the land they farmed on in the first place. Farmers certainly made inventories of their equipment and building structures before leaving. It would also be acceptable to white former farmers hoping for an opportunity to move on, as one such person said to me, from a racially defined past, both as investors and individuals.

One plan, apparently meeting resistance from war veterans and some of the citizens who received redistributed land, is to ask the newly relocated to pay rent into a fund. The government says it is making land leases available, which could enable local farmers to begin seeking credit for businesses. But if that was used to pay for a fund, it could take many years. The government should be more open about that.

Among white farmers kicked off their land during what many term “the invasion”, there is a sense that the government’s commitment to compensate was only a token gesture. “Many from that generation are getting old. They [the government] can say something that sounds good and then hope the issue goes away,” said one former farmer, now living outside Zimbabwe.

Everyone we spoke to only agreed to talk on condition of anonymity, but apparently farm leases are already being handed out, with success depending on the government’s agreement. Where the rules are malleable, government officials can give you access to nationalised resources and local business that otherwise might seem impenetrable. That could be a mixed blessing. At worse, a lack of law can raise questions about bribery, muddying the waters even further.

Zimbabwe is offering its hand out to invite investment, but may struggle to meet the expectations of investors it has created, even as some low-level investment begins. (Some investors are already building local agribusinesses and joint ventures between locals and some international agribusiness professionals are ostensibly doing well.)

There is a danger that investment could go forward without the controversial past being resolved. Investors and locals feel they cannot talk openly about government accountability, on an issue many still dwell upon. Some clarity here is essential, or else opacity, and all the risks that come with it, could cloud the country’s investment landscape for years to come.

What are your thoughts on Zimbabwe’s investment climate? Email clare.p@peimedia.com