Time Bank of Zimbabwe has increased its syndicated loan proposal to the government from US$35 billion to US$38 billion.
This proposal aims to address Zimbabwe’s sovereign debt obligations and provide compensation to several key groups, including former farm owners, pensioners, and ex-farm workers.
The initiative is a critical component of the bank’s business repositioning strategy and seeks to improve Zimbabwe’s credit risk rating and business environment.
The proposal comes at a pivotal time, coinciding with the government’s high-level structured dialogue platform on debt resolution, attended by key stakeholders such as President Emmerson Mnangagwa, African Development Bank (AfDB) President Dr. Akinwumi Adesina, and former Mozambican President Joaquim Chissano.
These discussions highlighted Zimbabwe’s efforts to resolve its longstanding arrears and debt, which have hindered access to affordable international funding.
Time Bank’s loan proposal encompasses payments for Zimbabwe’s foreign debt (US$20.4 billion), compensation for land improvements by indigenous farmers (US$10 billion), and payments to white former commercial farmers for land improvements (US$3.5 billion).
Additional allocations include compensation to foreign investors under Bilateral Investment Protection and Promotion Agreements (BIPPAs), bank depositors and pensioners affected by hyperinflation, and insurance policyholders.
Compensation for former farm owners, as outlined in Section 295(3) of Zimbabwe’s Constitution and the 2020 Global Compensation Deed (GCD), remains central to Time Bank’s strategy.
The GCD provides a framework for raising funds to settle land improvement payments, bolstering investor confidence by reinforcing respect for property rights.
Time Bank plans to assist in raising the US$3.5 billion required for land improvement compensation, leveraging donor contributions and banking solutions. Managing Director Chris Takura Tande emphasized the bank’s commitment to creating a scalable model that aligns with local and international standards.
The proposed compensation framework will be executed in three phases:
- Pilot Scheme: The bank will use its own resources to raise an initial US$1 million for compensating former farm owners by purchasing Treasury bonds on a willing buyer-willing seller basis.
- Second Scheme: Funds will be raised from local and international investors to compensate former farm owners for land improvements.
- Third Scheme: Compensation for the nine other groups, including pensioners, insurance policyholders, and ex-farm workers, will follow.
Treasury bonds will be the primary instrument for settling compensations, minimizing financial losses for recipients and ensuring viable government repayment mechanisms.
Time Bank’s initiative is projected to improve Zimbabwe’s business environment by addressing longstanding compensation disputes and demonstrating a commitment to resolving sovereign debt.
The proposed framework also includes safety nets for vulnerable groups, meeting International Monetary Fund (IMF) recommendations for sustainable debt resolution.
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