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Banks urged embrace 99-year leases

by Staff reporter
23 Jun 2020 at 07:51hrs | Views
GOVERNMENT is ready to work with the banking sector to fine-tune the 99-year land leases to enhance productivity in the agriculture sector, Finance and Economic Development Minister, Professor Mthuli Ncube has said.

In an interview here on Friday, he expressed concern that although Government had issued the 99-year leases to most farmers to make the land bankable, most institutions were still skeptical over the instrument.

Prof Ncube, who was on a familiarisation tour of the Beitbridge Border Post, said agriculture, as one of the major economic drivers, needs a jumpstart in order to unlock its potential. As such, he said, the Government was fine-tuning the Command Agriculture concept, which should be implemented from a commercial perspective.

"I am aware of the need to give farmers bankable land so that they may operate as businessmen. However, that doesn't necessarily fall under my ministry," said Prof Ncube.

"First of all, if you look at the Command Agriculture initiative, you will note that we have gone through stages all designed to bolster the process for upgrading productivity within the agriculture sector. "In the last one year and going forward as the Government, we have been able to crowd in the banking sector as a lender to the agriculture sector by providing banks with guarantees under the commercial Command Agriculture initiative.

"This is what has also happened with this year's command winter wheat programme and the same thing will happen during the summer cropping. So that's a progression when I look back to the past years from where we were."

Prof Ncube said the 99-year leases give farmers some form of title to the land. "But I am also aware that banks have not welcomed these as warmly like in other countries," he said.

Prof Ncube said the Government was ready to fine-tune the leases to suit the needs of the farmers and the banking sector to improve the way of doing business. He said Zimbabwe was going through a transition and hoped that at some point banks will accept the 99-year leases.

The minister said in some instances, other banks were offering loans to carefully selected farmers to support resource mobilisation and issues of productivity in the country's agriculture sector.

"Frankly speaking we are also going through a transition and I think overtime, once banks are more comfortable with lending to the agriculture sector you will find the Government pulling back and the banks will be very comfortable to carry forward," said Prof Ncube.

"In some instances, several banks do not need the Government guarantees. They have said we will just peg our interest rates at a level where we feel the credit risk has been taken care of and they choose the farmers carefully, especially those with a good track record.

"So, they are able to protect themselves through that kind of screening and so the 99 -year leases are not an issue for this kind of banks though we may need not to mention their names".

Source - chronicle