Source: Govt, banks row over 99-year leases | The Herald June 30, 2017
Africa Moyo in VICTORIA FALLS
A ROW has erupted between local financial institutions and Government over the bankability of 99-year leases which had been primed as the solution for farmers to unlock credit from banks.
This comes as the Reserve Bank of Zimbabwe (RBZ) says its interactions with banks show that they will not accept 99-year leases until “some aspects” have been included in the documents.
RBZ deputy director (Economic Research) Mr Samuel Tarinda told delegates at the ongoing ZNCC annual congress here yesterday that: “The major bone of contention is the 99-year leases which are being perfected to incorporate the aspects that banks would want so that they (farmers) use them as collateral.
“But I think banks view farming as a business and where they see value, definitely they will support but this is where we are coming in terms of the collateral registry that we have just developed recently so that some of the movable assets that they (farmers) do have can also be considered as collateral, not just the title to the land.
“So I think once some of those issues have been resolved, you must see banks seeing value in supporting agriculture.”
However, Lands and Resettlement Minister Dr Douglas Mombeshora expressed concern at the attitude by banks saying the amendments done on the 99-year leases recently were suggested by financial institutions.
“We have completed work on the 99-year leases and all the amendments that we did on the 99-year leases were on the advice by the bankers.
“We did what they wanted and I am surprised that they continue to say that the 99-year leases are not bankable . . . it is the attitude that bankers have.
“I have seen white former commercial farmers getting millions (of dollars) from the same banks to fund agriculture when they didn’t have an offer letter.
“And when the (black) farmer goes to the bank and is denied that money, it is just the attitude which means our banks are not supportive to our farmers,” said Dr Mombeshora.
He urged banks to change their attitude and support farmers, adding that the 99-year leases are only designed to give confidence to farmers that they can invest on the piece of land they have and would not be chased away.
There was renewed hope for farmers that they would access loans from banks this season after Government announced that the 99-year leases had been perfected and ready to be used as collateral.
Banks have reduced lending to the agriculture sector by about 15 percent in the last 17 years after Government embarked on the land reform exercise.
Currently, 16 percent of banks’ loan books go to the agriculture sector, compared to over 30 percent in the 1990s, which
resulted in high production levels for all major cash crops.
The RBZ says it is negotiating with banks so that they increase their lending to agriculture to 30 percent.
“We would desire to have that percent (14 percent) go back to yesteryears. . . As you are aware, the Reserve Bank, together with the banking system, we have been supporting agriculture in terms of financing and I think when you look at the outstanding credit at the moment, about 16 percent of total credit is going to the agriculture sector directly.
“We would like to see that percentage grow again and I think in 1996 it was about 35 percent, now (it) is down to 16 percent and we want to get back to 30 percent and . . . we have been discussing with banks so that we can allocate at least 30 percent of their portfolio to the agriculture sector,” said Mr Tarinda.
He added that agriculture’s value chain linkage with the manufacturing sector could catapult the economy to stardom.
Agriculture contributes about 60 percent of raw materials used in the manufacturing sector, making its revival critical.
The RBZ says it has also licensed about 180 microfinance institutions (MFIs), some of which are more suited to cater for the needs of smallholder farmers in particular and the agriculture sector in general.
Mr Tarinda said already, some of the MFIs have advanced money to farmers and farmers’ organisations with a view to growing productivity.
“I think 10 percent of their portfolios are currently within the agriculture sector,” he said.
COMMENTS
A 99 year lease is not collateral of stolen land now owned by the govt. A bank cannot seize property in the case of default when the land does not belong to the individual but to the state, hence no loans will ever be forthcoming – secondly the land stolen is legally owned by the ousted farmers with their title deeds lodged in the banks.
One cannot borrow money against a non existent asset. Try it the world over and has been the case for a 1000 years.
Therefore in the case, not worth the paper that it is written on.
Why does the govt not provide loans from the treasury? Easy because they know they will not get their money back and there are no assets to seize because they so called own the asset in the first place.
We have seen with state funded inputs, they are sold on the side of the road within 48 hrs. Why – because it’s a free handout and the same will happen if the banks loaned funding – the beer halls would be full -Christmas has arrived early!
The govt is clueless of the basics and still cannot and will not see it as an economic disaster in the making and there is no way out other than restoration of property rights or by a willing seller willing buyer basis.
Lastly, if you do no rightfully own something one will not develop or polish it – simple fact!
Lets put it simply for our minister. If you rent a property in town, can you borrow against it – NO. If you are a squatter do you have rights – NO.
Those whites allegedly being lent millions are actually working for the banks who have devised a way to recover the debt accrued by the chefs. The very same people who stole high production farms thinking farming was easy. They agree with the banks to hand operations over and save face, so the minister cannot claim banks are lending to whites only, the banks are recovering their money. Now if Mr Phovo gets into trouble the banks have no hold over him, he is not going to get a loan. Furthermore if your landlord has stolen that property or not paid for it you have less chance especially if he or she can throw him off at any time.