The recent announcement by the Minister of Lands and Rural Resettlement, Dr Douglas Mombeshora, that Government and bankers have at last come to an agreement over the use of the amended 99-year lease documents as collateral to secure funding for farming operations has been received with mixed feelings.

While some are optimistic over the development, some are saying it is too early to be celebrating.

The last time when Government made the pronouncements, financial institutions continued to turn them down despite having agreed to accept them as collateral.

Back then in 2009, farmers were disappointed when banks rejected their 99-year lease documents, only accepting title deeds to their urban properties.

One bank manager said during that time that offer letters and 99-year leases (before the amendments) could not be used as collateral because they were not transferable to third parties, whereas “loans are bilateral arrangements between the bank and its customer.”

His argument was that if the farmer defaulted on paying back the loan, the bank would have no claim on either the lease or the land to settle the debt.

And as it turned out, hundreds of desperate farmers surrendered their title deeds to access the loans.

Agribank was offering loans specifically meant for maize growing only. During that season most of the farmers only managed to access the funds as late as December.

The meteorological department had predicted a normal to above normal rainfall season; everything seemed to be going according to plan for the farmers.

But alas, things fell apart as the rains disappeared mid season when most of the crop was at a tussling stage.

As a result, farmers failed to make meaningful harvests due to the natural disaster. Most failed to pay back the loans which were now accruing interest rates of 40 percent.

Negotiations had to be done to spare the farmers’ properties until such a time when they would have meaningful harvests.

Indeed farming is gambling, its either one wins or loses their investments.

Now the era of the bankable 99-year leases is upon us.

The meteorological department has again predicted an early rain season.

With the bureaucratic systems in the country’s banking sector coupled with the issuance of these leases vis-à-vis the time factor, this could be yet another disastrous season for farmers.

Banks are likely going to release funds as late as December due to the long winding process involved.

First farmers have to apply to the Ministry of Lands and Resettlement for the leases. The ministry is then expected to send its teams to verify the availability of the applicant on the ground.

Following that, the Ministry needs to send its valuation teams to value the improvements on the farms (the applicants are expected to pay for this).

It is still not clear how valuation teams from Government come to a conclusive figure as to how much farmers should pay for the improvements.

Farmers that require quick surveying can hire their own surveyors.

Lastly, the applicant is expected to register the lease with the Deeds Office where he or she is expected to pay registration fee.

The process of issuing out these leases cannot be done in a week or two considering the stages involved.

Some analysts suggest that in the event that funds are released late, farmers should be free to grow other crops such as sugar beans which require less time to mature than maize.

Zimbabwe Commercial Farmers Union President Mr Wonder Chabikwa is of the opinion that the issue is not about bankable leases, but rather interest rates that are prevailing in the farming sector.

Mr Chabikwa said the high interest rates were the major causes why most farmers were likely to continue losing their properties after failing to pay back loans.

He said while the issue of bankable leases was welcome, the question was what it meant to the farmers.

“Do farmers really understand what bankable means. This means that if one fails to settle borrowed funds, he or she will lose the farm; the bank can take over and lease it to someone else until it recovers its money.

“But who is this someone; again this goes back to the former white farmers who are waiting for such a thing to happen so that they go back to the land.

“So we have to address the issue of interest rates first. Former farmers were being charged between 2, 5 to seven percent per annum.

“They never failed to settle their loans because of that. In the event of natural disasters, they were using land as security, not title deeds of their urban houses,’’ explained Mr Chabikwa.

“The urban houses are for our families and when farmers surrender these to the banks they have every reason to believe that they will definitely harvest enough to settle the loans. What happened during the 2012/13 farming season was a natural disaster and therefore must be set aside,’’ he explained.

He said when the leases were being crafted; farmers’ unions suggested that land must be used as collateral instead of house title deeds.

Trust is of essence between the farmers and financial institutions in dealing with the leases, he said.

“It is unfortunate that there is mistrust between the financial sector and farming community.

“As unions we are appealing to Government to come up with means and ways to alleviate the farmers from being held at ransom by those against the land reform programme.

“This is war, that is why it was labelled “hondo yeminda” and it is not yet over,’’ he declared.

Lease application process

1. Farmer applies to the Ministry of Lands and Resettlement for the lease.
2. The Ministry sends its teams to verify the availability of the applicant on the ground.
3. Following that, the Ministry sends its valuation teams to value the improvements on the farms (the applicants are expected to pay for this).
4. Farmers that require quick surveying can hire their own surveyors.
5. Lastly, the applicant is expected to register the lease with the Deeds Office where he or she is expected to pay a registration fee.