Bankers examine A1 permits

Bank chief executives are reviewing recently-introduced A1 farm permits to determine whether or not they are acceptable as collateral for loans.
The Bankers’ Association of Zimbabwe on Friday requested all heads of financial institutions to examine the documents and give individual assessments in this regard.

BAZ will co-ordinate consolidation of the views into a single position to be presented to Government.

Last week Government began issuing the permits to farmers allocated land under the A1 resettlement scheme.

The permits enable holders to assume full land ownership and make long-term developments.

The first 79 beneficiaries at Emily Park Farm in Makonde got the permits from President Mugabe on Wednesday.

Around 221 470 resettled farmers are in line to receive the documents in a process expected to take at least three years.

Experts say sticking points are likely to arise from transferability of the permits, a matter some bankers have already pointed out.

A BAZ official told The Sunday Mail: “We have not yet analysed the document in order to ascertain whether the model is acceptable or not. It is, therefore, still premature to comment on whether banks will accept it as collateral.

“We are trying to understand the implications of the document. Farmers need to be patient and allow banks time to look at the instrument and subsequently make their representations.

“Today (Friday) an email was sent out to all bank chief executive officers imploring them to begin internal consultations regarding the acceptability of the document. Bank chief executives are expected to then sit with their technical staff and analyse the document and prepare what they think about the instrument.”

University of Zimbabwe’s Institute of Environmental Studies deputy director Dr Jeanette Manjengwa said A1 permits provided tenure security.

“From what I have gathered, the A1 permits seem to be more secure compared to the previous tenure document.

They contain more official detail which includes a map of the plot, details about the farmer among other important information.

“The permits are more secure by virtue of the fact that as long as the farmers fulfil the conditions set in the agreement, they stand no risk of losing the land, therefore, making it permanent in a way.

“It is very difficult for Government to remove a farmer from the land as long as he fulfils the permit conditions. On the issue of funding for agriculture, I strongly believe that it is a joint effort of the farmers, Government and banks.

All three arms need to pull in one direction for the development of the sector.”

Agronomist Mr Peter Gambara weighed in, saying banks would likely endorse the document on confirming that their recommendations were taken on board.

“The idea behind drafting of the A1 permits was to come up with a tenure document that is acceptable to Government, farmers and financial institutions as well as address the reluctance by some banks to accept the previous tenure certificates.

“The issue, however, remains on the transferability of the document so as to make it secure as a resource for borrowing.

“As long as that issue is addressed banks will gladly accept the permits as collateral.”

Previously, smallholder farmers did not have permits and relied on offer letters issued by district administrators.

The latest permit bears a map of the allocated plot and details of the beneficiaries, including those relating to their spouses.

The document is only being issued to farmers above 21 years old and who are using land productively.

Surviving spouses and children or heirs of a permit holder will inherit tenure, though Government reserves the right to cancel the document if the holder no longer wishes to farm or sublets the property.