Crunch talks on 99-year leases

LIVINGSTONE MARUFU

 

Government is in crunch talks with banks to strengthen the 99-year leases and make them bankable in a last ditch attempt for the instrument to be acceptable as collateral by the financial institutions.

The talks come as banks have rejected the 99-year leases, 17 years after the government introduced the instrument for farmers to use as security when borrowing from banks.

Business Times can report today that the ministries of Finance and Economic Development Ministry and Lands, Agriculture, Fisheries, Water and Rural Development Ministry and the Reserve Bank of Zimbabwe (RBZ) while the Bankers Association of Zimbabwe (BAZ) and the Law Society of Zimbabwe are the private sector representatives.

Lands, Agriculture, Fisheries, Water and Rural Development Ministry permanent secretary John Basera said this week the 99 year leases would soon be bankable.

“We are finalising the bankable of the 99 year leases and we are having dialogues with the Bankers Association of Zimbabwe. We need a farmer to walk into a bank and get a loan because he or she has a bankable 99-year lease which works as security.”

“The Lands Ministry together with the Treasury and RBZ are locked in talks with BAZ and Law Society of Zimbabwe to ensure that the 99-year lease is a success,” Basera said.

BAZ chief executive officer Fanwell Mutogo said the banks are awaiting a response from the government.

“As you know we have submitted a document to the authorities which raised concerns about land tenure security among other issues and we will soon see how they will address the concerns raised,” he said.

The crunch talks on the bankability of the 99-year leases comes as the Agricultural Industry Development Support Institute for Southern Africa (AIDSISA) will next week host an agri-business breakfast seminar to unpack the myths surrounding the 99-year lease agreement afforded to the new farmers as well as the issue of agricultural insurance.

The Agribusiness Breakfast seminar will be held at the Harare Showgrounds on August 3 2023 morning where Lands minister Anxious Masuka and his Finance and Economic Development counterpart Mthuli Ncube and Mutogo will be keynote speakers.

Farmer and chairperson of the Old Mutual Life Assurance Company and former OK Zimbabwe CEO Willard Zireva will be the moderator.

AIDSISA founder and JT Holdings CEO Jeffrey  Takawira said  it was important for farmers and those involved in agriculture to fully understand the intricacies involved in the business of agriculture, therefore this event has been tailor-made for their needs.

“Most farmers went into agriculture as a result of the government’s highly successful land reform programme but not many are knowledgeable about the 99-year lease agreement that they have signed and what it means to them.

“They also need to hear from the experts on why it is important to insure your farming produce or harvests,” Takawira said.

“I urge all farmers and those that are involved in the business of agriculture either as suppliers or service providers to attend this event as it might just change their fortunes.”

The government has said it would use the annual production and productivity return forms as the basis for the issuance of the leases.

This comes after banks last year rejected new security mechanisms tabled by the government to make the 99-year leases bankable.

Parliament intervention in 2021 failed to resolve the longstanding wrangle between government and the banks over the contentious 99-year leases.

The document, which was a legally binding agreement between the government, which is the lessor and the farmer, who is the lessee, was meant to trigger massive cash into the agriculture sector through loans extended to the farmers who hold the 99-year leases.

Banks say the leases were not bankable and farmers cannot use them since land belonged to the State, meaning it could not be sold to recover funds in the event of farmers defaulting on loan repayments.

Under Section 72 of the Constitution, all land in Zimbabwe now belongs to the State.

This means the banks would be powerless to sell the land in the event of a default by farmers.

There is an increasingly growing concern among lenders that land can be taken away from the existing farmers who are potential borrowers.

Banks said this removes security on the part of land as it may be taken away at any time.

Farmers have struggled to access funds from banks who continue to shun the 99-year leases as not bankable.

The lenders want immovable assets as collateral, which most farmers do not have and this has significantly affected production on the farms.

 

 

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