The Sunday Mail
The Bankers’ Association of Zimbabwe (BAZ) says there are still outstanding issues pertaining to the bankability of 99-year lease agreements while discussions with the Government to make them bankable are still ongoing.
This comes after Zimbabwe Commercial Farmers’ Union (ZCFU) last week claimed that banks are still rejecting to take as collateral the lease documents despite Government announcing that the document can now be used as collateral.
BAZ president Mr Sam Malaba all but confirmed that the leases are not yet bankable when he told The Sunday Mail Extra that there are still concerns that still need to be addressed between BAZ and Government.
“A lot of work has already gone into making the lease documents ‘collateral friendly’. There are still areas of concern that still need to be addressed between Government and BAZ which will make the leases bankable,” he said.
Mr Malaba would not, however, go into detail on what the concerns are as such information will be divulged at a later stage.
“Naturally banks have made submissions and representations to the relevant authorities but given the levels of discussion, it would be unwise for BAZ to discuss these in the media before Government has fully considered those areas of concern,” Mr Malaba said.
He added that collateral was not the only reason that determines whether the banker lends funds to a borrower or not.
“However, we should mention that collateral on its own is not the single reason that a banker will not lend a borrower funds.
“The most important considerations in making a decision to lend are: the viability and soundness of the underlying business proposal, the availability of a sound market where the product will be sold to repay the loan and the commitment of the individual to the project and the quality of his or her managerial oversight.”
Agriculture in Zimbabwe is heavily depressed with most farmers struggling to come up with capital in a sector plagued with high costs of production.
This has resulted in farmers relying heavily on Government assistance for inputs while some have resorted to loan sharks.
ZCFU president Mr Wonder Chabikwa, however, reckons that even if the leases were to become bankable, a lot of farmers would not afford them as local banks are charging high interest rates.
Some sections of the society have argued that using the 99-year leases as collateral could potentially derail the gains of the agrarian reform as a lot of farmers may lose the land after failing to repay the loans.
