Government has appointed UK based financial advisory firm, Newstate Partners, to help raise funding for the compensation of white former commercial farmers, Finance and Economic Development Minister Mthuli Ncube said in a statement Monday.
Newstate Partners is a UK headquartered independent advisory firm dedicated to the provision of specialist financial advice to governments and central banks among other entities.
Appointment of financial advisors for the fund mobilisation exercise under the Global Compensation Deed agreement signed on 29 July 2020, took longer than expected resulting in the extension of the period for the first payment which was scheduled for 29 July 2020.
But with the appointment of Newstate Partners now in place, and with the firm having already started work, Zimbabwe now expects to make the first payment of US$1,75 billion by end of July 2022.
“Nevertheless, we are pleased to advise that the process has now been completed and the contract with the Financial Advisors Newstate Partners, was signed on 21 April 2021.
“The Financial Advisors have already commenced work with the JRMC (Joint Resource Mobilisation Committee) supporting its capital-raising efforts,” Minister Ncube said.
Newstate Partners is expected to adopt a multi-pronged approach in raising the funds. According to Mthuli, the funds would be raised through issuance of listed and unlisted bonds domestically and internationally.
Funds could also be raised through listed and unlisted equity and quasi-equity type instruments. Structured financial arrangement, including the issuance of asset backed securities is also considered an option.
There are also plans to issue equity as well as asset-backed financial securities, according to Minister Ncube.
“These structures will augment and complement the resources that have already been made available,” he said.
The total amount due to the farmers amounts to US$3.5 billion and government has already started making token payments towards the bill.
In its 2021 National Budget, Zimbabwe committed an amount of $2 billion towards compensating the white former commercial farmers.
In addition, in December 2020, the Zimbabwe government secured US$250 million towards the compensation process through donation of a shareholding of equal value in state owned mine house Kuvimba Mining House.
The first dividend from this long-term shareholding amounting to US$1 million was paid on 23 June 2021.
“This amount (paid quarterly) will be applied towards partial settlement of the agreed global compensation figure,” said Minister Ncube.
Focus is however still on making the initial bulk payment of US$1,75 billion by July 2022.
The balance would be paid in equal instalments of US$437,5 million per year 4 years after the initial payment and probably taking into
consideration token payments that would have been made under the Kuvimba Mine House arrangement.