via State, banks meet over 99-year leases 19 January 2014 SundayMail by Itai Mazire
The Government has begun refining the 99-year lease agreements issued to beneficiaries of the land reform programme to enable the farmers to access funding from financial institutions.
Under the present set-up, the beneficiaries cannot secure bank loans for production as the documents cannot be used as collateral.
It is understood the Ministry of Lands and Rural Resettlement is already working on a new framework which will soon be presented to Cabinet for scrutiny. Ministry officials are also expected to meet Bankers’ Association of Zimbabwe (BAZ) representatives this week to discuss the proposals.
In an interview last week, the Minister of Lands and Rural Resettlement, Dr Douglas Mombeshora, said authorities want to ensure farmers secure loans before the next winter and summer cropping seasons.
“We noted in the media that while responding to criticism from legislators during a post-budget seminar last week, the BAZ president, Mr George Guvamatanga, said money held by banks belonged to depositors and it would not be prudent for them to lend it to farmers based on the 99-year lease.
“As a ministry, we immediately wrote to Mr Guvamatanga on Wednesday so that we could meet and craft an agreeable document that would see banks give farmers loans since agriculture is a key driver of the economy.
“After noting that there was no response from BAZ since then, we have since communicated with them through the ministry’s permanent secretary that we meet this week. “The whole process involves sitting with them and coming up with a security-based document that will see the farmer go to the bank and secure funding for his or her farming activities.”
Dr Mombeshora said there was need for banks and farmers to collaborate as agriculture underpins the country’s economy.
“It is not about us, as Government, giving farmers title deeds so that they secure loans from financial institutions. The matter is about us, as a ministry and BAZ, meeting to come up with a document that will see farmers get funding.
“We understand their position that some farmers will default on loan repayment, but there is now need for them (banks) to understand that Zimbabwe is an agro-based economy that also needs support from financial institutions.
“The ministry is working on the modalities for a security-based lease document that will give banks trust and at the same time see farmers benefiting. BAZ has since indicated that they are willing to accept proposals with regards to farmers securing loans.
“It is a matter of giving banks security, and this security will be in the lease agreements. Government will not give farmers title deeds since this was rejected during the constitutional referendum. We need to deal with this stalemate between farmers and banks.”
Zimbabwe Farmers’ Union second vice-resident Mr Berean Mukwende said the initiative would help address the farmers’ plight. He said Government should ensure refining the lease agreements was mutually beneficial. “Communal farmers form the majority which is really suffering because they are not accessing any loans from banks. There is need for banks to trust farmers. The farmers should also be able to pay back loans on time. “We are depositors in these banks, hence there is need for them to allow us to secure loans like any other individual in Zimbabwe.”
Last week, legislators attending a post-budget seminar in Harare raised concern over farmers’ failure to secure bank funding. They argued that the situation continued to inhibit production.
Responding to the complaints, Mr Guvamatanga said BAZ was open to discuss the matter with stakeholders with a view to finding solutions.
“At the end of the day, banks will take their money where they are likely to be paid back, where there are proper structures. Unfortunately, the proper structures at the moment are only in tobacco,” he said.
COMMENTS
Cheeky bankers…and the BAZ pres didnt even respond to the minister.
There is no need to sit and talk. All the bank needs is bankable deeds, something they can use to independently sale in order to recover the debt. Obviously it will not happen overnight. They will have to assess the market rates of the land in order to ascertain how much each “farm” can be given. If the land is not “selleable” that is if no one is willing to pay for land the banks may not be in a position to give out depositors funds. It will take time for the effect of bankable deeds to be used as collateral. The government’s job would be to build the confidence that the land will be tradeable and that confidence can only come overtime. My point is that it is not 1 + 1 equals 2. However for agriculture to develop the issuance of tradeable deeds is the only sure way of success. Furthermore some farmers will immediately try to sell their deeds, hopefully not claiming it back after spending all the proceeds buying madhongi makabheji or such other behavior as reported after the Z$50 000 payouts of 1998.
“Government will not give farmers title deeds since this was rejected during the constitutional referendum.”
The problem is quite simple. The farmers have non-transferable leases, which means the banks cannot come into possession of the land used as collateral.
@Masvukupete.Very logical.Well said.
But I forsee a corrupted land valuation system if ever it is done.The under utilised,inaccessible land of the big boys;will be good enuff for loans,while…….
The whole concept of borrowing depends on the “Lender” having in his possession a document such as “title deeds” backed up by a cast iron justice system that guarantees his ability to sell those assets to recover his money should the “borrower” default on repayment of the loan. In Zimbabwe we have none of these things. The farms were “Taken” by a government that in effect nullified the concept of “Title” and the Justice system (government) lost all credibility by having judges and politicians forcibly occupying land in defiance of all international norms of Law.
As things stand right now if an individual borrows money from a bank and the bank tries to sell his house to recover the loan when he defaults, all he needs is the intervention of a minster, soldier or policeman and the sale will be stopped or nullified. In effect rule by decree of the person with the biggest stick.
Until this is rectified the country will never return to the concept of economic normality.
Its a clear admission that violent farm invasion destroyed proper farming therefore the government must support its invaders not to pass the buck to the banks.These new small farmers were given loans and agricultural inputs by the government but they diverted it to the purchase of expensive 4×4 wheel drive vehicles used in towns not on the lands.The refusal by the government to give these land grabbers title deeds its another clear indication that they realise the exercise was illegal.These new small farmers can be removed anytime if the government wants with no recourse by the occupiers.What do you say about this @Murimi Wanhasi? Its easy to destroy but very hard to build.The banks should stand firm on their banking principle,so that they are not cheated by these political officials.If you are prepared to temper with your economy backbone, you should realise that you are burying your country.This is what I would call real treason case.
Johnny K you are correct. Absolutely. The rule of law does not exist. I know of a business just outside of Harare. The so called ‘war vets’ take a job there and insist it is done for free, When the manager insists on payment he gets threatened. many, many stories like this. Not one of us has a drop of confidence in the politics of this nation and the spin off is no confidence in the banking sector and vice versa. Everything becomes political. The whole of Zimbabwe needs to be de-politicised! Sooner rather than later.
A 99 year lease may be good in regard to agricultural sectorial challenges shown in our economy but at the same time this may put our financial sector in a serious liquidity crunch since the duration if recovering mended amount would take so long ,remember we are fighting for better position of casht availability in an economy. This will indeed have a detrimental effect on the cash conversion cycle of the banking sector!!!