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Golden Sibanda Senior Business Reporter
GOVERNMENT and banks have moved a step closer to making 99-year leases bankable with the agreement now before the Attorney-General’s office.

Once the relevant processes are completed, farmers will now be able to use the land tenure titles to obtain loans from banks to finance their activities.

Reserve Bank of Zimbabwe Governor Dr John Mangudya confirmed an agreement has been reached between banks, Government and other partners.

“We agreed; all banks, ourselves, Government, the Ministry of Lands and Rural Resettlement and the World Bank consultant,” Dr Mangudya said.

“It is now being finalised to be put into a legal instrument. I spoke to the Minister (Dr Douglas) Mombeshora; he said we should be done by May” he said.

The central bank governor would not be drawn into saying more on the issue, but the biggest problem has been the non-transferability of 99-year leases.

This was because in their current state, resettlement land allocated by Government, under 99-year leases, belongs to the State and cannot be sold.

There also were issues around the methods of evaluating the land separately from developments on the land, somehow contrary to the norm.

Normally, the value of land is inseparable from developments on it and in terms of 99-year leases, regarding them separately raised issues with banks.

A 99-year lease is a legally binding agreement between the Ministry of Lands and Rural Resettlement on behalf of the Government of Zimbabwe.

While the lessor agrees to lease a piece of land for an agreed rental for 99 years, the lessee agrees to rent the said piece of land at the agreed rental.

The 99-year lease agreement is issued to the land beneficiary as a form of long-term lease hold of tenure, but not as title for eternal ownership.

It is generally believed that addressing sticking issues regarding bankability of 99-year leases will give then market value and collateral outlook.

This would enable farmers to use the land tenure titles to obtain funding from banks. Zimbabwe’s agricultural requires over $2 billion annually.

But the economic and liquidity situation in Zimbabwe means Government cannot adequately support farmers financially due to funding limitations.

That is despite the fact that agriculture is one of the main sectors of the economy, accounting for over 16 percent of gross national product and provides sustenance to over 75 percent of the country’s 14 million population.

This explains why it is critical that banks come in as private players to fill in the funding gap, but the issues around bankability of 99-years leases has made it difficult for farmers to benefit financially from their land hold leases.

Efforts to get comments from Bankers Association of Zimbabwe president Dr Charity Jinya and Lands and Rural Resettlement Minister Dr Mombeshora were not successful by the time of going to print yesterday