CONCERN on the non-transferability of 99-year leases remains the single biggest impediment to efforts to the land use contracts acceptable as security for bank loans to fund initiatives aimed at rejuvenating agricultural production and productivity.
While banks openly expressed their reservations regarding fears to provide loans against current 99-year leases, analysts contend sticking issues relate to resolving transferability of the land use contracts in the event a borrowed farmer defaulted.
Zimbabwe requires an average of US$2 billion to fund agriculture in order to restore production and productivity that was affected partly by land ownership reorganisation, but largely by the country’s decade of economic instability.
Efforts at reviving the sector have suffered from the lack of affordable long-term funding, especially considering agriculture has traditionally been private sector funded.
But attendant land ownership terms on transferability make the 99-year leases unattractive to banks for purposes of getting loans, starving farmers of funding.
With Government announcing it will not directly fund farmers beginning next year, resolving the issue of the 99-year leases to make them useful as collateral for bank loans to farmers has never been more urgent and critical than now.
And fears have started swirling about possible delays to making 99-year leases bankable with Rural and Lands Resettlement Minister Dr Douglas Mombeshora saying Government wanted to first look into banks’ recent input to the process.
Land held under the 99-year leasehold remains the property of the State and cannot be transferred without the consent of the Minister of Lands and Rural Resettlement.
On the other hand, financial institutions require collateral in the form of immovable property, to be guaranteed of repayment for loans advanced to farmers.
Concerns arise when a farmer fails to repays the loan. Since the debt-ridden farmer was leasing the land from the State, any new farmer who inherits the farm and extinguishes the debt is not guaranteed security of tenure.
Geo-information consultant at GISkonsult Plc and Midlands State University lecturer (Surveying and Geomatics Department), Dr Charles Paradzayi, contends there are two options Government can use to balance competing interests.
Though, Dr Paradzayi contends Government’s protectionist attitude on land may be justified by a recent report by the International Land Coalition to the effect that an estimated 83 million hectares have been acquired by investors in large-scale agriculture in many of the developing economies around the world.
This development reportedly marginalised the indigenous people in the process, yet there is need to make land transferable to be usable as collateral for loans.