Zim farmers thrown a lifeline

LOCAL famers can benefit from funding by financial institutions for the 2014-15 agricultural season using 99 year leases as collateral, a senior government official has revealed.

Most banks have in the past demanded collateral in the form of immovable assets, a prerequisite most farmers lack, arguing that the 99-year leases were not clear enough on land tenure

The financial institutions argued that properties allocated to land reform beneficiaries remained State-owned and could not be sold to recover funds in the event farmers defaulted on payments.

But Lands and Rural Resettlement Minister Douglas Mombeshora yesterday told The Herald that Government had agreed to amend some sections of the 99-year leases to suit the requirements of the financial institutions.

"We had a meeting with BAZ recently where we looked at the concerns they had raised," he said.
"This resulted in us going clause by clause together to see where exactly their concerns were.

"We agreed on several amendments to suit their requirements and we have sent the new changes to the Attorney General's Office and after that we will take the changes to Cabinet."

Most farmers are preparing for the forthcoming agricultural season and need money to buy inputs.
Minister Mombeshora said by the end of this month, all could be in place for farmers to borrow money from financial institutions using the 99-year leases as collateral.

"We are trying to push that by the end of this month everything will be in place to make the leases bankable and allow farmers to borrow money from financial institutions to finance their operations," he said.

"As you are aware, free agricultural inputs cover A1 and communal farmers and A2 farmers have to source funding, hence the need to speed up the process to enable them to source the money ahead of this new season."

Minister Mombeshora could not be drawn into discussing the amendments, but BAZ once revealed that banks wanted a special purpose vehicle to be set up, which would pay off loans in the event farmers defaulted.

Such a scenario would mean none of the resettled farmers would lose their land in the event they failed to pay back their loans.

But the system could be prone to abuse as farmers could willfully default in the knowledge that there was a facility to pay off the loan.

There was also a call for banks to consider project viability as collateral.

BAZ president Sam Malaba confirmed that they had agreed on some amendments with Government, with a view of making the 99-year leases bankable.