Local banks will take the proposed 99-year lease security mechanisms to Parliament for debate as the industry seeks legislators’ inputs in an attempt to make the document bankable and unlock funding for farmers, it has emerged.
The latest development comes as banks were reluctant to accept the 99-year leases as collateral which has hamstrung farmers from accessing loans from banks as they do not have security.
The absence of funding due to collateral issues has been a blot on government after embarking on a land reform exercise 20 years ago.
Bankers Association of Zimbabwe CEO, Fanwell Mutogo, told Business Times the roping in of the legislators would address all sticking points.
“We have finalised the 99 year lease document and we are tabling it before the parliament (today) where various discussions will be made. The discussions in the parliament will help us to come up with a securitised document which will be beneficial to both farmers and the banks,” Mutogo said.
Finance and Economic Development Minister, Mthuli Ncube (pictured) last week said the new leases will be rolled out next year if banks accept the new security mechanisms.
Ncube said: “(In) 2023, the government will finalise and roll out a 99-year lease which is bankable in order to enable farmers to secure funding from financial institutions. This also provides them with security as they carry out their agriculture activities. This is expected to boost confidence and increase growth in the agriculture sector.” The government has been pushing for the 99-year lease since 2004.
However, banks rejected them as collateral saying they were not bankable.
Recently, the Lands, Agriculture, Fisheries, Water and Rural Development Minister Anxious Masuka said the government has made submissions to the banks on the bankability of the 99-year lease and an announcement would be made soon.
The lands ministry wants to transform the 21 000 A2 farmers to become perennially successful businesspeople by 2025 and aims to transform the 360 000 A1 farmers to become formal and viable small-to-medium enterprises by 2025.
Masuka said production return forms that are submitted by February 15 of each year will work as a leeway of getting 99 year leases.
He said both A1 and A2 farmers are now required to submit annual production and productivity returns.
For A2 farmers, these returns form the basis for assessment for eligibility for a 99-year lease.
Farmers need not apply and pay for such leases as this is now an automatic process, which should motivate farmers to produce more, according to Masuka.
A2 farmers now receive permits and not offer letters and these have securitised features.
Section 72 of the Constitution vests all agricultural land in the State and the bank would be powerless to sell the land in the event of a default.
Resettled farmers have struggled to access financing from banks who continue to shun 99-year leases as not bankable, thereby affecting production on the farms.