No Hope For Beneficiaries Of Land Reform As Bank Loans Remain Inaccessible Despite 99-Year-Lease
20 March 2021
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Local banks are demanding personal assets, including houses as collateral to finance agriculture, amid the unresolved confusion over the bankability of 99-year leases.

Banks say the risk of financing farmers is too high since the land cannot be used as collateral due to tenure uncertainties.

A 99-year lease is a legally binding agreement between the Ministry of Lands, Agriculture, Water and Rural Resettlement, on behalf of the government, and the farmer — the lessee.

Government issued 99-year leases from 2006 to resettled farmers after the land redistribution exercise that began in 2000. However, banks have refused to use leases as collateral, arguing they are not bankable, citing that land still belongs to the State.

Finance and Economic Development minister Mthuli Ncube insists the government is looking at offering full and partial guarantees to banks for the acceptance of 99-year leases. But banks argue the process of redeeming land as collateral is shrouded in secrecy.

Bankers Association of Zimbabwe (BAZ) president Ralph Watungwa said talks stalled due to lack of transferability mechanisms of the 99-year lease. Lack of investments on the farms is a sticking issue.

Last year the government embarked on a farm downsizing programme, while underutilised land was repossessed.

“The starting point is that we must get farmers to believe they own the land and they should invest on farms. We have farmers who don’t want to invest but want to borrow frombanks. That’s the fundamental problem on the land issue,” he said.

“The problem is that there are certain sections of society who are not entitled to take over the land because they are not indigenous or don’t have the money. You can’t say you want to realise security andfind another Zimbabwe to buy the land; there are very few people like that. It means the ability of banks to realise value in the event that the customer is unable to pay becomes limited.”

Watungwa said according to the law, when one transfers land it has to be to the government.

“You don’t go to an auction to buy land like a house. With land it has to be to certain people. It means the value of the land as security then becomes questionable and banks would need to get their money back from the asset in the quickest possible time,” he said.

“A lot of banks are now financing agriculture using houses or another asset as security instead of the land. So it means that the land has no value. Again the process of making it bankable takes a long time because of the bureaucracy as the process requires legislative changes. It’s not an overnight thing. It requires a lot of stakeholders’ approval. But should the relevant authorities apply their minds, it’s a process that should not take two years.”

SOURCE-Zimbabwe Independent