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Ever since the fast track land reform programme started in 2000, most of the new farmers have been struggling to access capital to fund farming projects.In fact, the majority of the farmers are using rather unorthodox means to finance their operations. Those employed are using their salaries while some pensioners are committing the meagre amounts they get monthly to farming. Only a few have managed to get support from banks and other institutions such as the Reserve Bank of Zimbabwe.
Yet it is known that farming is a business which requires a huge capital outlay to be both profitable and successful.
Most former white commercial farmers were millionaires who were successful in the enterprise because they had access to capital, not that they were better farmers than their black counterparts. Commercial banks and other finance houses were more than ready to fund white commercial farmers who they regarded as some of their biggest clients.
When the government embarked on the land reform programme and indigenous people became farmers, cash from the banks suddenly dried up.
One of the reasons given by banks why they could not fund new farmers was that there was no security.
According to banks, before the land reform programme, white farmers had title deeds for their farms which they could use as security to borrow. If one defaulted, the title deeds could be used to sell the farm.
Under the new land ownership structure, land now belongs to the state and cannot be sold. This created complications for banks who feared exposure should they lend to new farmers who later failed to repay the loans.
However, this problem is likely to be a thing of the past as government and banks have agreed to amendments to make 99-year leases given to new farmers bankable.
According to Lands and Resettlement Minister Dr Douglas Mombeshora, the government and banks have agreed to modifications to the 99-year leases that would make them acceptable as collateral.
The government has for the past 14 years been funding input support programmes for new farmers but with falling revenue inflows, it is apparent this arrangement is not sustainable. Farmers must now look for own funds to run their businesses.
We hope that banks will not make an about turn and look for new excuses not to fund farming operations since they were involved in the modification of the leases to make them bankable.
The land reform programme has been a contentious issue which invited illegal sanctions on the country but we believe that banks as businesses should not be involved in the political machinations of those opposed to land reform but rather fund viable proposals from new farmers just like they used to do when the majority of farmers were whites.
It’s been almost 15 years since the land reform started but the true potential of new farmers has not yet been realised to its fullest because the majority of them are failing to access funding.
But this can be addressed once banks accept the bankable leases and start giving out loans.
While the bankable leases are a welcome development, government needs to put safeguards that we don’t create a new class of land barons who buy farms of farmers who would have defaulted on their bank loans.
Online Reporter