Banks accept 99-year leases

Livingstone Marufu
FARMERS armed with 99-year leases can now access loans to finance farming upon meeting conditions set by the banks, ending years of a bitter row between Government and bankers over the bankability of the leases.

The Bankers Association of Zimbabwe said financial institutions were committed to support the agriculture sector but would assist only those with viable farming projects and valuable infrastructure.

Those who are eligible for the loans include farmers who own houses, sheds and mounted irrigation equipment. Farm addresses are taken as proof of residence at account opening.

“Banks have agreed that farmers should get loans as long as they are stable and meet the required conditions. These banks can hold both moveable and immoveable property as collateral for loans,” said BAZ in a statement.

BAZ, however, warned that a 99-year lease did not guarantee a farmer access to bank loans.

“Banks are looking at various other risk factors in assessing whether a farming business meets the minimum criteria. The farming enterprise must be viable in accordance with the assessment criteria set by the lending bank,” said BAZ.

A banker told our Harare Bureau recently that no farmer with a 99-year lease has been turned down by any financial institution.

“If any bank has a problem with the lease, the association would be keen to know the bank and branch. Leases are legal documents and the Lands Ministry appreciates that banks have to do due diligence before giving out loans,” said the banker who preferred anonymity.

Lands and Rural Resettlement Minister, Dr Douglas Mombeshora, said; “As I have always said, we completed work on the 99-year leases. The amendments were on the advice of bankers. As we speak there are a couple of A2 farmers who have already obtained the 99-year leases which function as the title document for the farmer to acquire a loan.”

He said no farmer has been turned away by any bank because financial institutions agreed that the leases were legal document.

Minister Mombeshora urged farmers to report any cases of banks rejecting 99 year leases. He explained that banks could not give loans without following due procedure which satisfy the set requirements for one to qualify for financing.

Zimbabwe Commercial Farmers Union (ZCFU) president Mr Wonder Chabikwa said while the move by banks was a positive development, banks should review interest rates downwards.

“However, my worry is on interest rates which are still too high. The current 12 percent interest rate is exorbitant and we recommend a range between 5 and 8 percent, so farmers can be able farmers to repay the loans,” he said.