Agri-loans: Banks stick to their guns | The Herald

via Agri-loans: Banks stick to their guns | The Herald January 14, 2014 by Zvamaida Murwira

BANKS are adamant that they will not disburse agri-loans to farmers using 99-year leases as security, insisting that the document is not bankable.
Bankers Association of Zimbabwe 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 basing on a document that exposes financial institutions in the event of defaults on repayment.

Mr Guvamatanga was responding to criticism from legislators yesterday at a post-budget seminar aimed at familiarising Members of Parliament with the 2014 National Budget presented by Finance Minister Patrick Chinamasa last month.

Hurungwe West legislator Cde Temba Mliswa (Zanu-PF) asked why financial institutions were not providing loans on the basis of offer letters and 99-year leases.

Cde Mliswa accused banks of neglecting food security by preferring to fund tobacco production over maize.
Mr Guvamatanga — who was fielding questions from the floor after making a presentation in which he lauded Minister Chinamasa for taking on board about 90 percent of their submissions — said 99-year leases were not bankable.

“Where we lend, we don’t lend our own money, but other people’s money. We have a fiduciary responsibility to depositors,” he said, adding: “We have not been able to resolve this issue and we have provided some suggestions.”

Mr Guvamatanga, a Barclays Bank managing director, said banks had supported other commercial farmers because of their commitment to the business.

“The old commercial farmer would walk into a bank, get money for farming, school fees, holidays, tractors and goes to the farm. He would no longer return to Harare. But it is not happening now.”

He said BAZ was open to engagement with stakeholders on how the issue could be resolved.
On why banks were keen to fund cash crops like tobacco as opposed to food crops like maize and wheat, Mr Guvamatanga said tobacco farming was well-structured.

“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 in tobacco,” he said.

Earlier, Clerk of Parliament Mr Austin Zvoma said the Constitution did not provide a time-frame within which the Budget should be passed but only gave the latest day it could be presented, which is no more than 30 days after the start of a new financial year.

Mr Zvoma was responding to media reports that suggested Government violated the law by “delaying” debate and passage of the National Budget.