Agri-loans: Banks stick to their guns

Mr Guvamatanga

Mr Guvamatanga

Zvamaida Murwira Senior Reporter
BANKS are adamant that they will not disburse agri-loans to farmers using 99-year leases as security, insisting that the document is not bankable.
Bankers Association of Zimbabwe president Mr George Guvamatanga said money held by banks belonged to depositors and it would not be prudent for them to lend it to farmers basing on a document that exposes financial institutions in the event of defaults on repayment.

Mr Guvamatanga was responding to criticism from legislators yesterday at a post-budget seminar aimed at familiarising Members of Parliament with the 2014 National Budget presented by Finance Minister Patrick Chinamasa last month.

Hurungwe West legislator Cde Temba Mliswa (Zanu-PF) asked why financial institutions were not providing loans on the basis of offer letters and 99-year leases.

Cde Mliswa accused banks of neglecting food security by preferring to fund tobacco production over maize.
Mr Guvamatanga — who was fielding questions from the floor after making a presentation in which he lauded Minister Chinamasa for taking on board about 90 percent of their submissions — said 99-year leases were not bankable.

“Where we lend, we don’t lend our own money, but other people’s money. We have a fiduciary responsibility to depositors,” he said, adding: “We have not been able to resolve this issue and we have provided some suggestions.”

Mr Guvamatanga, a Barclays Bank managing director, said banks had supported other commercial farmers because of their commitment to the business.

“The old commercial farmer would walk into a bank, get money for farming, school fees, holidays, tractors and goes to the farm. He would no longer return to Harare. But it is not happening now.”

He said BAZ was open to engagement with stakeholders on how the issue could be resolved.
On why banks were keen to fund cash crops like tobacco as opposed to food crops like maize and wheat, Mr Guvamatanga said tobacco farming was well-structured.

“At the end of the day banks will take their money where they are likely to be paid back, where there are proper structures. Unfortunately the proper structures at the moment are in tobacco,” he said.

Earlier, Clerk of Parliament Mr Austin Zvoma said the Constitution did not provide a time-frame within which the Budget should be passed but only gave the latest day it could be presented, which is no more than 30 days after the start of a new financial year.

Mr Zvoma was responding to media reports that suggested Government violated the law by “delaying” debate and passage of the National Budget.

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  • anon

    True especially given that these ZANU PF beneficiaries have not been paying back the loans they took. Handiti that is part of the reason why there is a crisis in the banking sector. Imari yevanhu iyi, haingonyuki mumabhangi umu.

  • Zvarevashe

    This has been a long standing point of contention between Investors, Banks and Government. Knowing a significant percentage of new farmers have defaulted on previous loans over many many years, we can legitimately ask why the relevent Government Ministries and lawmakers, haven’t yet finalised essential modifications to the 99-year leases offering sufficient guarantees to make them bankable.
    While we understand the Government position wishing to retain absolute control over nationalised land, everyone is aware this is contrary to concepts of transferable and bankable property rights, mandatory for confidence in investment enabling economic growth and realisation of certain aspects of Zim Asset.
    If Government wishes to become part of the Global economy and have access to its resources, there’s no choice but to compromise and change its ideological stance, allowing external players, much as our look east friends have used to achieve their formidable growth and envious economic success.

  • blessing

    what people should know is that bankers are leveraged institutions, using a lot of borrowed money in the form of deposits. it therefore means that lending should be done carefully since the providers of money i.e depositors will come back and demand ther funds. careless lending would result in more challenges like collapse of the banking and the ripple effects that will have on the economy.

    If the farming community needs funding, then they ought to take farming as a business run on commercial grounds and not a hobby!

    I love farming but i dont support lending to a sector that is not run commercially or professionally!

    • makwavararama

      vane culture yekusadzosa zvikwereti. the banks are right

  • banzimdollars4ever

    yep, this is real money we are playing with, not Zim$ rubbish printed crap.

  • Ndinizvangundinizvangu

    It is the politicians themselves who are to blame for the collapse of the banking sector. They have borrowed money and used for other purposes. Instead of buying the required fertiliser and chemicals per hectare they have reduced that in order to show off the money as theirs and not as borrowed money. They are not full time farmers but cellphone farmers who phone frm the comforts of their offices to assess whether anything is being done at the farm. I remember the boss of stanched asking the vice president to name the farmers who were present at a financial meeting. The VP said it him/her and others. The bank boss told them point blank that if they wanted to be farmers they must leave the office and go and stay on the farm.

  • Mr.Sunningdale(Kong Town)

    The money belongs to us not the banks and knowing Zanu,those silly offer letters mean nothing one day you are given that letter the next day another Shefu will come with a bunch of thugs to evict you from the farm offer letter or not,it’s not worth the paper it’s written on.

  • YOWE78

    I foresee a backlash and a lot of insults coming from our ruling party..a lot of the usual uneducate nonsense..”we will indigenise the banks so that we get loans for farmers”..problem with our learned government is that they do not want to accept the truth …apa vaudzwa chokwadi they will twist it and turn it political mira muwone