Source: Farmers sold dummy | The Financial Gazette June 22, 2017

… as banks reject 99-year leases

BANKS continue to reject 99-year leases handed to landholders resettled on properties previously owned by white farmers, months after government announced that the documents were now bankable.

Only 125 leases are known to have been issued to farmers in 2006, with government prevaricating over further allocations on the basis that it was recalibrating these documents to make them acceptable to banks.

For more than a decade, not a single bank has acknowledged extending loans to the farmers using the leases as collateral, despite assurances that the leases were bankable, raising suspicion that the ZANU-PF government is leading the country’s farmers down the garden path.

While the Bankers Association of Zimbabwe did not respond to The Financial Gazette’s questions over the 99-year leases, it has emerged that government and the bankers are tussling over modalities governing the management of the leases.

One stakeholder, who asked not to be named for professional reasons, said: “The main bone of contention (between bankers and government) has been the fact that the 99-year lease does not give the banks the right to sell the lease in the event that a loan beneficiary has defaulted. Government insists it wants to re-allocate the same piece of land. If banks were given the right to dispose of that land to the next best bidder, the problem would be easily solved.”

Despite land, indigenisation and economic empowerment having been the cornerstones of ZANU-PF’s manifestos and election campaign strategy since 2000, indigenous black farmers have failed to get title deeds to the land they now occupy.

“I have not yet seen any transaction involving the 99-year leases. Until you see a lease for sale, those leases are virtually worthless because the Ministry (of Lands) has the right to take it back without notice. Only by giving security of tenure by reestablishing intrinsic land values can the country’s farms become productive again,” said economic commentator, Eddie Cross.

Since 2000, government has acquired in excess of 14,5 million hectares of land worth close to $15 billion, using prevailing regional land values. The land has been declared State-owned.
The announcement in early March this year by Finance and Economic Development Minister, Patrick Chinamasa, that the 99-year leases were now bankable appears to be just one of a litany of empty promises given since 2006.

Four years ago in October 2014, government, through the Minister of Lands and Rural Resettlement, Douglas Mombeshora, made exactly the same promise, announcing that government had ironed out differences with bankers over the issue.

Again last year, the same Minister indicated that the 99-year leases were finally bankable after the documents were redrafted to address concerns raised by financial institutions over the security of the leases.

Agricultural economist, Peter Gambara, said it would be difficult for government to give title to the indigenous farmers who benefitted from the fast track land reform programme.

“Government has always been sceptical about giving title to the land beneficiaries because there was always fear that the land might find its way back to the previous owners. And to some extent, that fear is true. Look at how many whites are leasing land from blacks who benefitted from the land reform programme. The biggest culprits are the big chefs who look large pieces of land but they are failing to utilise it… It’s going to be very difficult to convince banks to accept the 99 year leases as bankable,” said Gambara.

He advised government to offer land beneficiaries leases with the option to purchase the farms.
“That way, we will make land valuable again and it will have a market value and eliminate a lot of chancers who continue to hold on to prime land that they cannot utilize,” said Gambara.
He said that arrangement would create “a natural process whereby good farmers will buy more land as they find it profitable to farm it and those who fail to use it or only got it through their positions or because it was fashionable will sell it and move on to concentrate on what they are good at”.
Zimbabwe Farmers Union president, Abdul Nyathi, accused banks of refusing to fund farmers with 99-year leases out of spite.

“They are still ignoring that paper. They are saying it is not bankable…But the truth of the matter is that the paper does not support a loan; what is bankable is the development plan one presents,” said Nyathi.

“There is no difference between a title deed and the 99-year lease. So a loan should be given on account of the strength of someone’s development project and not these leases. That is what matters. The pretence is that the 99-year leases are not bankable. The truth is that the project should be the one that is bankable.”