Banks hesitant on new land document
…..adopts wait and see attitude
LIVINGSTONE MARUFU
The banking sector has adopted a wait and see attitude towards the Government proposed bankable land document.
Last week the Government announced that it will introduce a more secure document that will be more bankable, registrable and transferable, which will allow lenders to easily sell the agricultural land in the event that a farmer fails to repay the loan.
All along, the lenders have been rejecting the 99 year leases as collateral due to tenure uncertainty.
Two months ago, the lenders told the government that it will not accept the 99 year leases unless the land can be sold in the event of a default.
“As long as the government has not addressed bank issues, the acceptability and bankability of the documents will be a challenge. It’s not about what the government says about the document but what the document says about securing a loan.
We want to liquidate that land into cash to recover our money to protect depositors money. If farmers fail to repay loans, we need to convert the land into cash.
Banks want to be satisfied first to accept these documents,” a banking sector source, who preferred anonymity told Business Times, a market leader in business, financial and economic reportage.
The source added: “There are so many stakeholders which are involved including the farmer.I hope they have consulted widely and covered all the concerns.We have seen nothing yet, we hope the authorities have addressed so that we will move to implementation.The banks have gone to the Land Commission on what they want to accept the more secured document.
We have made contributions two months ago but the government hasn’t gotten back to us on the issue.”
Lawrence Nyazema, president of the Bankers Association of Zimbabwe (BAZ), expressed his desire to see a more secure document to support the farmers.
“We await details of the structure and features of the new document.The most important aspect of getting credit facilities from banks is to have bankable projects that have a good track record and can generate enough cash flows to repay the loan. Security is key but will be the last rather than first consideration in granting loans,” Nyazema said.
