‘99-year leases must be bankable’

(Last Updated On: October 13, 2022)




Local banks say  land security is ‘ideal’ for farm financing as the 99 year leases have become a bone of contention  between government and the financial institutions, Business Times can report.

The Bankers Association of Zimbabwe (BAZ)  CEO, Fanwell Mutogo told Business Times that there has to be a way to make the 99 year leases bankable.

“The government has to review our concerns and see how best they can be addressed whether in full or in part but there has to be a solution,” Mutogo said.

He added: “They want to come up with an all-inclusive policy around 99 year leases therefore they have to listen to stakeholders and address their concerns.”

He said the authorities may need time to come up with solutions.

However, the Lands, Agriculture, Fisheries, Water and Rural Development minister Anxious Masuka  was optimistic that 99-year leases will be ready next year.

“Land is an economic enabler. I urge all A1 and A2 farmers to use this productively and to complete the Annual Production and Productivity Returns.

“The Annual Production and Productivity Return Forms are now the basis for the issuance of 99-year leases. We are targeting to issue them out early next year,” he said.

But, the lenders are worried about invasions across the country, a strong indication that the land can be taken away from existing farmers who are potential borrowers.

Banks remain adamant that as long as the government does not bring finality to the land reform programme, they will not accept the 99-year lease as collateral.

The concerns were that no farmers are immune from farm invasions as they are still taking place around the country and this removes security on the part of the land as it may be taken away at any given time.

Even the land protected under the Bilateral Investment Protection and Promotion Agreements was invaded and is yet to be returned.

Section 72 of the Constitution says all land belongs to the State, meaning the banks would be powerless to sell the land in the event of a default.

This has resulted in farmers struggling to access funds from banks who continue to shun 99-year leases as not bankable, thereby affecting production on the farms.

The government has tabled fresh security mechanisms to make the 99-year leases bankable as it seeks to help resettled farmers get funding from banks.

The move comes as lenders have been rejecting the leases as collateral due to tenure uncertainty.

The lenders want immovable assets, which most farmers do not have.

Masuka said the ministry seeks to transform the 360 000 A1 farmers to become formal and viable small-to-medium enterprises by 2025.

The 99-year leases were first issued in 2006 to resettled farmers that had benefited from the fast-track land reform programme at the turn of the century.

But banks argued that the leases could not be used as collateral since the land belonged to the State and could not be sold to recover funds  in the event farmers defaulted on loan repayments.

This has resulted in farmers failing to benefit from funding from financial institutions.

For years, the government has been failing to convince local lenders to provide loans to farmers.

Masuka said production return forms that are submitted by February 15 of each year will determine who would get the 99-year lease.

Officials from the Treasury, Lands ministry and BAZ also confirmed that the parties were on the brink of a major breakthrough on 99 -year leases.

Banks are only offering loans that do not exceed the forced sale value of assets listed as collateral.

This strategy protects both the borrowers and the banks.

Pursuant to ensuring that farmers achieve maximum productivity, the Cabinet  recently approved the Land Commission Bill to clear out multiple farm owners, resolve land disputes and deal with land beneficiaries leasing out farms to those who are not entitled to them.

The land audits will be carried out by the Land Commission  as stipulated  in Section 296 of the Constitution.

The Commission will carry out periodic audits and ensure accountability, fairness and transparency in the administration of agricultural land controlled by the State.



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