Zimbabwe open to renegotiate 99-year leases with banks

FINANCE and Economic Development Minister Professor Mthuli Ncube has said Government is open to renegotiating with banks to make 99-year leases acceptable to financial institutions.

The Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya is on record as saying banks have agreed to accept 99-year leases as collateral after Government tweaked the leases to be transferable and bankable.

However, it emerged in Parliament last week that bankers are reluctant to accept the leases as collateral.

Bankers have insisted that the leases are not transferable in the event that a farmer borrows money and fails to repay.

Responding to questions in Parliament last week, Prof Ncube said it was not correct that the 99-year leases were unbankable as even small-scale farmers prior to Independence used to have leases that were bankable.

He said if there was anything that the bankers did not understand and needs fine tuning, there was room for discussions.

"This is not correct that leases are not bankable. There must be something in some of the clauses in the 99-year leases which I am not aware of which is making them unbankable.

"I think that the issue of the content of these leases is not closed. If there are issues that need to be renegotiated and better understood by the financial institutions, that avenue is still open. We have to fine-tune it to a level where they are acceptable to financial institutions," Prof Ncube said.

He said what would work best for the farmers to secure loans from financial institutions were title deeds but the country was not yet there.

"If banks are sufficiently innovative, you do not even need a 99-year lease to lend to a farmer, you can basically securitise the crop for a farmer and use innovative instruments that do not require collateral in the form of land itself," Prof Ncube said.

Presenting a Ministerial Statement on the State of the Economy last week, Prof Ncube said Government has since 2009 paid US$64,4 million to 93 former commercial farmers for the improvements they made on re-allocated farms.

He said Government was committed to finalising compensation for all farmers who were affected by the land reform programme in accordance with the country's Constitution and obligations under bilateral agreements. In the 2019 National Budget, Treasury set aside US$53 million for the compensation of former commercial farmers.