The Sunday Mail
Livingstone Marufu
Ninety-nine-year farm leases could become acceptable as legal title for bank loan applications next month, with infrastructure like farmhouses usable as collateral.
The development will boost local farmers whose operations have been hampered by lack of credit facilities as financial institutions are reluctant to accept the leases that were launched in 2006
Last week, bankers embraced the refined 99-year leases as bankable documents.
Banks encouraged farmers to build homes on farms to strengthen their security of tenure and use the farms to establish “domicilium citandi et executandi” — a place of reasonable permanent residence.
Lands and Rural Resettlement Minister Dr Douglas Mombeshora told The Sunday Mail that, “It’s now a matter of announcing to the Cabinet (this week) what we have agreed with the ministries of Finance and Economic Development, Agriculture, Mechanisation and Irrigation Development and the Bankers’ Association of Zimbabwe.
“We are happy to tell Zimbabweans that all the said parties have the final copy of the lease document and we are ready to roll out the new leases in the next two weeks to ensure that farmers access their loans in time.
“For all those who have the old leases, we encourage them to get the latest copy of leases so that we can have a uniform bankable document to avoid confusion in the future,” Dr Mombeshora said.
Bankers agreed that for farmers to get loans, they must have stable and assured stay on the land for as long as the farmer was productive and had access to assured and stable markets for produce.
The lease allows banks, or any lender, to hold both moveable and immoveable property as collateral for loans.
An incentive is also given to farmers who invest in immoveable infrastructure like houses, irrigation canals, dams, barns, sheds and other structures that promote productivity and reduce the risk of failure.
In a statement, BAZ advocacy officer Mr Clive Mphambela said: “Banks support agriculture and are keen to ensure that farmers who hold 99-year leases have access to financial assistance to expand their farming operations.
“Immoveable properties (houses, sheds and mounted irrigation equipment) are very crucial in the application of loans and it is for this reason that banks request for a customer’s ‘proof of residence’ at account opening or at the establishment of any trading relationship with a banking institution.
“Ninety-nine-year leases will therefore give farmers a reasonable assurance of security of tenure, which will encourage the farmers to invest on the land.”
He said banks usually relied on forced sale value of collateral like moveable assets such as vehicles and immoveable assets.
As such, BAZ said banks would only offer loans that did not exceed the forced sale value of collateral to protect both borrowers and lenders.
