Compensation for land

In an important piece in the on-going Sokwanele debate on land entitled “The significance of land compensation for rehabilitation of Zimbabwe’s land sector”, Professor Mandi Rukuni, former chair of the Zimbabwe Land Tenure Commission and professor of agricultural economics at UZ, offers his thoughts on the compensation issue. As ever it is a measured, pragmatic stance and one with much merit. He makes a number of key points and maps out a way forward. It is worth summarizing the highlights.

He points out that existing legislation (from 2000) allows for compensation for ‘improvements’ only. This has been confirmed in the still-disputed draft Constitution, suggesting at least that the MDC agrees with this formula, although the Constitution allows for full compensation including for land for those farms governed by investment treaties. Around 125 farmers settled on this basis in the early 2000s before hyperinflation kicked in. Now others are contemplating this, among the former owners of the 1250 farms that have been surveyed and valued. Thus since the Fast Track programme, 210 farmers have been compensated for improvements. Compensation values which have been paid out vary from about $200,000 to $1.2 million, according to Rukuni.

But what would the total cost? In order for the agricultural economy to move forward and for investment to flow, with confidence once again being restored, dealing with the compensation issue is a priority. Under the existing law, compensation and so ‘quittance’ must precede the issuing of any new lease. Without compensation then, especially for the larger A2 farms, lease arrangements are impossible, resulting in continued insecurity for existing farmers.

According to government, the total settlement bill on this current basis would be US$1.5-2 billion. However, the Commercial Farmers’ Union disputes the legislation, arguing that compensation values should include land, improvements, interest and consequential damage. They estimate the total would come to between $6 and $10 billion. Clearly there is a big gap between the estimates. What then is a pragmatic solution? The fact that the government is serious about compensation is clear from the budget allocations up to 2014, over which period some $30 million has been earmarked for compensation. This is clearly not enough, and other support, including from the international community will be required, to resolve this. So, what else needs to be done?

Rukuni identifies two things for immediate action. First, valuations must be speeded up. Currently over 5000 properties still need to be properly valued, and if valuations are disputed, they must be dealt with in the Administrative Court. Second, a Land Acquisition Compensation Fund needs to be set up to allow swift and complete payment of all compensation. The fund would be made up of contributions from the national budget, contributions from international donors and development banks, and from transfer fees and ground rents from A2 farmers once leases were issued.

Above all, Rukuni argues for a pragmatic and flexible process. While there are some who will stick out for a full settlement and will continue to pursue this in any court that will hear them, there are many others – perhaps the majority – who want an end to the uncertainty. For many the economic collapse, as well as the loss of their farm assets, has resulted in severe hardships, very often in a vulnerable period of retirement, given the age profile of most former white farmers.

Rukuni comments, showing his frustration with all sides: “…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 position than the current huge gulf in positions”. In other words, he suggests, until there is a sense of joint movement on this donors, whose budgets are being squeezed in any case are unlikely to touch the politically charged prospect of compensating a few thousand white former farmers, prioritizing them above other perhaps more pressing humanitarian and development needs in the country.

Yet for the country to move forward some compensation deal, at least for the majority, is essential. This must emerge from a national consensus, driven jointly by former farmers and the inclusive government. This must represent a reasonable, not a maximum, claim, more likely in the ballpark of the government’s estimate. My personal view, expressed in an earlier blog, is that, rather than expecting the constrained national budget and aid budgets to bankroll this, any compensation settlement must be wrapped up in a deal around national debt. Yet sadly on this too, there remains little consensus. So, while the administrative and legal mechanisms for resolution exist, the political commitment from key players must be there too. Sadly, this may still be something that has to wait until a new political settlement is reached, hopefully in the next year, with a new agreed Constitution being the basis for moving forward on this thorny consequence of the land reform.