The government is engaging local banks to ensure that the proposed 99 year leases with new security mechanisms to be given to farmers are bankable, it has been learnt.
Finance and Economic Development Minister, Mthuli Ncube, confirmed the development saying the two parties were finalising the deal.
Ncube said the new leases will be rolled out next year if banks accept the new security mechanisms.
“(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,” Ncube said.
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 Minister of Lands, Agriculture, Fisheries, Water and Rural Development Anxious Masuka told Business Times that the government has made submissions 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.
“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.
“Now farmers need not apply for such leases. Farmers also need not pay for applications for such leases. This is now an automatic process, which should motivate farmers to produce more,” Masuka said.
A2 farmers now receive permits and not offer letters and these have securitised features.
The Bankers Association of Zimbabwe CEO, Fanwell Mutogo told this publication that banks and the authorities are working around the clock to finalise the 99-year bankability issue.
“We are finalising our submissions to the government so that we reach a conclusion on the 99- year leases issue. We will give more information soon,” Mutogo said.
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.
According to lands ministry officials, the finance ministry, lands ministry and the Bankers’ Association of Zimbabwe are on the brink of a landmark decision of making the leases bankable.
Banks are believed to be only offering loans that do not exceed the forced sale value of assets listed as collateral.
This strategy protects both the borrowers and the banks.