A1 land permits not guarantee to secure bank loans

The new A1 land permits are not a guarantee that farmers will secure bank loans but are crucial to providing beneficiaries security of tenure for an indefinite period, Government has said.
Lands and Rural Resettlement Minister Dr Douglas Mombeshora told this publication last week that the permits provided beneficiaries with permanent residence.

Constitutionally, all farm land remains under the State. Farmers are, however, in agreement with the provisions, saying guarantee to land took precedence over bankable collateral, since there were several avenues open to secure financing.

Previously, smallholder farmers relied on offer letters issued by district administrators in conjunction with village heads, councillors and chiefs as tenure documents. The letters have courted controversy over allegations of irregular issuance.

The new permits, however, guarantee beneficiaries tenure indefinitely and are transferable between spouses and children in terms of inheritance laws. The Bankers' Association of Zimbabwe has asked bank chiefs to examine the documents and give individual assessments with regards to their acceptability as collateral.

A nationwide roll-out of the permits is expected to start next month after provincial and district lands officers complete their fact-finding exercise on plots in their respective jurisdictions. The exercise involves on-site visits to collect data such as plot maps, farmers' identity particulars and land utilisation.

Only productive farmers will receive the permits. "A1 farmers are guaranteed at least one hectare of land for residential purposes, six of arable land and at least another hectare for communal grazing.

"A1 permits do not give farmers ownership of land but they are a guarantee of permanent right to the land which can be revoked when the farmer fails to meet laid-down conditions," said Dr Mombeshora.

"Farmers can carry out infrastructure developments on the land and in the event that the permit is revoked they will receive fair compensation for the developments. In such an event, a professional evaluation will be carried out to determine the value of the developments.

"However, land is not part of the value since it remains State land. We have directed our provincial lands officers to meet with the district lands officers to identify A1 farms in their areas and carry out visits on the farms and allocate plot numbers as well as collect other relevant data about the plot and the owners. "This process will likely take up to a month before we commence the full-scale roll-out."

However, Zimbabwe Farmers' Union second vice-president Mr Berean Mukwende said Government's commitment to organised farming was being hurt by punitive interest rates charged by banks.

"To use land as security is not ideal at this stage of our land reforms," said Mr Mukwende.
"For starters, local banks' loan interest rates and penalties remain astronomically high and no farmer in his right senses would want to borrow under such a regime.

"Most farmers will surely fail to pay back their loan obligations.
"How do you justify a situation where we have banks charging interest rates of up to 50 percent in an economy where we are using United States dollars?

"In most cases banks end up appropriating the farmer's property and equipment and this is detrimental to the development of the sector.

"Before we can talk about using land as security there is need for capital reforms in the country whereby the banking sector is reformed to support the new tenure dispensation we have. While as farmers we do need financial support, we also need reforms first."