Banks Refuse To Recognize 99 Year Old Leases - Reports

Local banks are reportedly refusing to accept 99-year leases given to farmers by the government as collateral as they are demanding houses and other personal properties as collateral to give farmers loans, The Zimbabwe Independent reports. Banks are reportedly denying to use the leases as collateral as they are saying they are not bankable and the land still belongs to the state.

This was revealed by Bankers Association Of Zimbabwe (BAZ) President Ralph Watunga who said talks between the government and bankers failed to yield any meaningful results because of transferability issues marring the 99-year-old leases:

…You don’t go to an auction to buy land like a house. With land it has to be to certain people. It means the value of the land as security then becomes questionable and banks would need to get their money back from the asset in the quickest possible time.

A lot of banks are now financing agriculture using houses or another asset as security instead of the land. So it means that the land has no value. Again the process of making it bankable takes a long time because of the bureaucracy as the process requires legislative changes.

It’s not an overnight thing. It requires a lot of stakeholders’ approval. But should the relevant authorities apply their minds, it’s a process that should not take two years.

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Commercial Farmers Union Andrew Ivordale pinned his hope on the new National Land Policy and said he hopes it will address the issue:

Hopefully the new National Land Policy will deal with this issue. The consultation process for this only ended in December 2020, so we need to allow time for the process to be completed. Banks lend depositors’ money. They have to have sufficiently secure collateral for those funds. A secure, tradable, transferable tenure instrument is what is required. While it is difficult to quantify, Zimbabwe has suffered substantial losses as a result.

The farmers were allocated the land by the government by the year 2006 after the infamous land redistribution program.

More: The Zimbabwe Independent