Government is strengthening the 99-year leases as part of efforts by the administration to convince local banks to accept them as bankable, Finance and Economic Development minister, Mthuli Ncube has said.
“We are strengthening our 99-year lease, in trying to improve its character in terms of property rights to make sure that this lease is bankable, available and transferable,” Ncube said at the recent World Economic Forum annual meeting in Davos, Switzerland.
Remarks by Ncube reaffirms sentiments by the Minister of Lands, Agriculture, Fisheries, Water and Rural Development, Anxious Masuka, who last year in October said bankable 99-year leases would be ready this year.
He, however, said not all farmers will get the 99-year leases as the government would use the Annual Production and Productivity Return Forms as the basis for the issuance of the leases.
It comes after banks last year rejected new security mechanisms tabled by the government to make the 99-year leases bankable.
Even the intervention of Parliament last year could not settle the longstanding wrangle between government and the banks over the contentious 99-year leases.
Government first issued the contentious 99 year leases in 2006 to resettled black commercial farmers that benefited from the fast-track land reform programme at the turn of the century.
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.
But, for the past 17 years, the 99-year leases have been a bone of contention between government and local banks as with the lenders rejecting the leases as collateral due to tenure uncertainty.
They said 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.
Solicitous banks said this removes security on the part of land as it may be taken away at any time.
Consequently, Zimbabwe 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.
The move by banks has significantly affected production on the farms.