financial sector will not lend to farmers using the 99-year leases as collateral and here is why !

Local banks have told Parliament the financial sector will not lend to farmers
using the 99-year leases as collateral as the landtenure in Zimbabwe is not
guaranteed, it emerged this week.

As was first reported by Business Times last week, the lenders met with legislators to
discuss the proposed 99-year leases’ security mechanisms to make it bankable.
However, the lenders were worried of continued farm invasions across the country,
a strong indication that the land can be taken away from existing farmers who are
potential borrowers. Multiple legislators and bankers, who attended the meeting in Parliament, told
Business Times that the lenders were 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. “There should be land
tenure security for farmers.This gives a guarantee to the
lender. But with our land,there is neither tenure nor security. One day you have
a good farmer and next day you hear that the farmer is no longer on the land,” a legislator,
who preferred anonymity, told Business Times.

The legislator said there were farm invasions 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,” added the
legislator.

Bankers said if land tenure
was well defined in that document, this will help in making the paper bankable.
“If land tenure is guaranteed,there will be improvements on
farms and we will have structures like workshops, garages,
warehouses, storerooms and houses and that way banks
can give loans according to these developments,” reads
part of the document tabled by
bankers in Parliament and seen
by Business Times.
Contacted for comment,
Bankers Association of
Zimbabwe CEO, Fanwell
Mutogo, was not at liberty to
share the bankers’ submissions
to Parliament.
He referred all questions to
BAZ president Mehluli Mpofu.
Mpofu could not be reached
for comment as his mobile
number went unanswered.
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.