Land rights: Banks speak-out
Sunday, 04 September 2011 11:12
BY STAFF REPORTER
THE Bankers Association of Zimbabwe (Baz) says lenders should be given the
same rights as the government in the ownership of land to resolve the issue
of collateral caused by the nationalisation of land.
The move is set to provide a lasting solution to lack of adequate financing
in agriculture with banks having been accused of deliberately starving the
sector of loans.
In correspondence seen by Standardbusiness, banks argue that by having the
same rights as the borrowers, they can recover the debts. “The lender could
therefore get eligible persons to farm and take over the debt. In short the
lender must be able to sell the lease,” Baz said.
It said the current land leases had limited security and cannot be used to
obtain funding. “The land leases provide limited security and in the event
of default by the debtor, the chances of recovering the loans are very low
unless the bank takes over and works the foreclosed leaseholds,” Baz said.
Government has amended some clauses to the 99-year leases to entice banks to
accept them as security. Baz said Clause 17.1.1 which states that the lessee
cannot cede, assign, hypothecate or enter into a working partnership without
the authority of the lessor and that lessor has six months to respond does
not work for debt recovery.
It said while Clause 24 gives government the power to cancel the lease on
account of breach of 17 grounds provided for as breaches this did not help
their cause.
“There is no provision guaranteeing the interest of a money lender in the
event of cancellation of a lease,” Baz said. The absence of agriculture
financing has been identified as the missing link to boost production in the
sector more than a decade after government embarked on the chaotic land
reform programme.
The new farmers do not have access to financing and this has incapacitated
the thrust to boost production after government said it could not allocate
adequate resources in agriculture.