via 99-year leases: Banks shift goalposts | The Herald November 29, 2013 by Golden Sibanda
BANKS have made fresh proposals regarding bankable 99-year leases in a development that could delay the use of the farm tenure contracts as collateral for purposes of obtaining funding from domestic financial institutions. Lands and Rural Resettlement Minister Dr Douglas Mombeshora said in an interview yesterday that banks had made fresh demands that had nothing to do with bank-able 99-year leases, which Government would need to first look at.
The minister said the banks are proposing something to do with the setting up of a trust fund and Government has written to fully explain their new position.
“Government wanted the 99-year leases to be used as security, but the banks said they had problems with it. In the process we said let us improve the document. There is a document we need to present to Cabinet.
“(But) the banks are talking about setting up a trust fund, which has nothing to do with the 99-year leases. If the Government has to alter the document, we want to know what they (banks) want,” the minister said.
Putting finality to concerns around the use of 99-year leases as collateral in their current state was critical considering that Government will from next year stop direct funding support to farmers opting to subsidise the production of inputs to make them more affordable.
While Government was working on improving the 99-year leases, Minister Mombeshora said they were surprised to learn through sections of the local media completely new demands the banks were making.
Efforts to get a comment from Bankers’ Association of Zimbabwe president mR George Guvamatanga were fruitless yesterday as he did not answered his phone.
However, he was recently quoted in the media AS saying banks wanted Government to set up a special purpose vehicle to guarantee loans to farmers.
Mr Guvamatanga said the arrangement would allow Government to repossess land when farmers defaulted instead of banks selling the land to willing buyers.
But fellow banker and BAZ immediate past president Mr John Mushayavanhu said when Government showed banks its proposed amendments to the leases, BAZ made its input and awaited a response.
Mr Mushayavanhu said that banks were willing to extend financial support to farmers provided Government made 99-year leases transferable.
“We need a situation where if a person fails to repay (a loan) we can repossess the farm and sell it to someone else provided that person is indigenous. Currently, the (99-year) leases are not transferable,” he said.
Farmers have recently struggled to access funding from banks because of lack of collateral in a development that has affected agricultural output.
Traditionally, the banks have played key role in funding agriculture, though this tended to be skewed towards commercial farmers.
Financing agriculture is critical considering that Zimbabwe is largely agro-based economy. The sector also provides most of the raw material used in another key pillar of the economy – the manufacturing sector.