Banks, govt still at odds

LIVINGSTONE MARUFU

 

Government and banks are failing to reach a compromise  on the contentious 99 year deal,it has been established.

Apparently, the government has been desperately trying  to make   the document bankable  so that farmers can access funding to expand their operations.

But, the  Bankers Association of Zimbabwe CEO, Fanwell Mutogo, yesterday told Business Times that no real progress has been achieved to resolve issues brought up  by the financial institutions.

“We raised a number of concerns in the document that have not been addressed and the bank’s stance remains the same as far as 99 year bankability,” he said.

Banks are worried that land security tenure remains the biggest threat to document bankability as the government continues to  evict farmers on land which makes it difficult for banks to claim money from the farmer.

Bankers say if the government can bring the land reform to finality, land was going to be a live asset which they could use as collateral.

Currently, banks view  land as a dead asset.

Last year, the banks roped in the parliament to help them to come up with a securitised document which will be beneficial to both farmers and the banks.

But the government did not move an inch to correct that.

A government source said the authorities will fast track the processes after the August 23 elections.

“ Everything is currently on hold, we expect to look into 99 year leases after the elections which are slated for next week,” a source said

Banks reluctance  to accept the 99-year leases as collateral which has hamstrung farmers from accessing loans from banks as they do not have security.

The absence of funding due to collateral issues has been a blot on the government after embarking on a land reform exercise 20 years ago.

Finance and Economic Development Minister, Mthuli Ncube recently  said the new leases will be rolled out this year if banks accept the new security mechanisms.

Ncube said: “This year, the government will finalise and roll out a 99-year lease which is bankable in order to enable farmers to secure funding from financial institutions. This also provides them with security as they carry out their agriculture activities. This is expected to boost confidence and increase growth in the agriculture sector.”

The government has been pushing for the 99-year lease since 2004.

However, banks rejected them as collateral saying they were not bankable.

The lands ministry wants to transform the 21 000 A2 farmers to become perennially successful business people by 2025 and aims to transform the 360 000 A1 farmers to become formal and viable small-to-medium enterprises by 2025.

Lands Minister Anxious Masuka said production return forms that are submitted by February 15 of each year will work as a leeway of getting 99 year leases.

He said both A1 and A2 farmers are now required to submit annual production and productivity returns.

For A2 farmers, these returns form the basis for assessment for eligibility for a 99-year lease.

Farmers need not apply and pay for such leases as this is now an automatic process, which should motivate farmers to produce more, according to Masuka.

A2 farmers now receive permits and not offer letters and these have securitised features.

Section 72 of the Constitution vests all agricultural land in the State and the bank would be powerless to sell the land in the event of a default.

Resettled farmers have struggled to access financing from banks who continue to shun 99-year leases as not bankable, thereby affecting production on the farms.

 

 

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