The Sunday Mail
Sunday Mail Reporter
Some banks have started extending loans to farmers on the basis of the refined 99-year lease document as collateral in a positive move expected to trigger an increase in agricultural production.
Zimbabwe’s agriculture sector has been stifled by failure by farmers to access funding, an advantage enjoyed by white farmers who have since paved way for the makority to farm the land. Government last November began issuing a refined 99-year lease that was the product of a series of consultations with financiers.
The Sunday Mail understands that financial institutions like FBC, Agribank, CBZ and ZB banks have a cumulative agriculture loan book of US$105 million. Zimbabwe Farmers Union executive director Mr Paul Zakariya said farmers were now accessing loans following an agreement between banks and Government.
“We have a number of A2 farmers that have started using refined 99-year lease documents for loan applications and have not faced difficulties in accessing loans,” he said. “I am not sure about the exact numbers of how many farmers were successful and how many were not, but what I am well aware of is that they are bankable and are now in use.
“Many farmers are still applying to get the refined copy (of the 99-year lease) and the sooner they apply the quicker they get their copies.” The leases were issued in 2006 but financiers were reluctant to accept them, citing provisions they said made them risky for use as collateral.
In accepting the refined leases, the Bankers Association of Zimbabwe said financial institutions were now extending loans to farmers who own houses, sheds and mounted irrigation equipment.
Farm addresses now stand in as “proof of residence” at account opening or at the establishment of any trading relationship with a banking institution.
Banks are offering loans that do not exceed the forced sale value of collateral to protect both borrowers and lenders and to guard against non-performing loans.
“As banks we have agreed that for farmers to get loans, they must have stable and assured stay on the land for as long as the farmer is productive, has access to assured and stable markets for produce,” said BAZ in a statement. “The lease allows banks, or any lender, to hold both moveable and immoveable property as collateral for loans.”
Lands and Rural Resettlement Minister Dr Douglas Mombeshora last week said, “We have some A2 farmers who have their refined hard copies of 99-year lease documents but we don’t exactly know how many they are.
“The applications of loans should be going on smoothly as no one with the title document has come to us complaining that he has failed to access loans. Our job is to ensure that we set the legal instrument which enables a farmer to have the title document that allows them to access loans … What they do with them we don’t know, their respective farmers’ organisations know better.”
According to the Lands Ministry, the leases are equivalent to title deeds as issuance, verification and documentation are carried out by the Deeds Registry Office.
A1 farmers are being issued permits which will allow them to access bank loans against immovable infrastructure on their plots.
