The Bankers’ Association of Zimbabwe (Baz) is locked in negotiations that could result in financial institutions accepting A1 farm settlement permits and 99-year leases as collateral.
Most banks have in the past demanded collateral in the form of immovable assets, a prerequisite most farmers lack. The lenders argue that properties allocated to land reform beneficiaries remain State-owned, thus, cannot be sold to recover funds in the event of defaults.
Maize growers have already begun summer cropping preparations, but are unsure whether or not banks will finally fund production based on their tenure documents.
There is also a call for banks to consider project viability as collateral.
Baz president Mr Sam Malaba – in an interview last week – said bankers were in talks that might see them recognise the papers.
“We are still discussing the issue. I can’t say at the moment whether the discussions will yield a positive result or not,” said Mr Malaba.
“I also can’t give a timeline of when we expect to conclude the negotiations, but what I know is that once the discussions have been finished, we will then meet the relevant authorities.”
In previous seasons, farmers have sought to increase productivity through timely input purchases and land preparations. However, production has remained inhibited mainly due to lack of funding.
Ideally, Agribank should be the foremost agriculture loan provider, but has failed to effectively carry out its mandate owing to sanction-induced constraints, among other factors.
The bank is yet to receive Government funds for onward lending while the Infrastructural Development Bank of Zimbabwe (IDBZ) has earmarked US$4 million for the summer farming season.
IDBZ interest rates will be determined by market conditions at the time of disbursement and the loans will cover 12 months for working capital and at least 18 months for capital expenditure.
Last week, Lands and Rural Resettlement Minister Dr Douglas Mombeshora urged banks to accept tenure documents extended to farmers. He said the financial institutions should not deny new farmers funds when they are funding white farmers who do not have title to the land.
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