Elita Chikwati Senior Reporter
Government is looking at offering full and partial guarantee to banks for the acceptance of 99-year leases when farmers access funding this season, as negotiations with financial institutions to perfect the document continue, Finance and Economic Development Minister Mthuli Ncube has revealed.
This came out at the 7th Annual National Agribusiness Conference which was held at the Zimbabwe Agricultural Show yesterday.
The conference was organised by the National Economic Consultative Forum in conjunction with the Zimbabwe Agriculture Society to enhance agriculture production and productivity and also come up with sustainable solutions to challenges being faced by the industry.
Senior Government officials, including Lands, Agriculture, Water, Climate and Rural Resettlement Minister Perrance Shiri, Justice, Legal and Parliamentary Affairs Minister Ziyambi Ziyambi and Minister of State for Harare Senator Oliver Chidawu, NECF officials, ZAS officials, farmers unions and other stakeholders in the agriculture industry also attended the conference.
Minister Ncube’s announcement came after Minister Shiri had raised concern that financial institutions were backtracking on the issue of the bankability of the 99-year lease.
He expressed concern that during negotiations, the financial sector agree to accept the 99-year lease, but when farmers approach the banks, they do not access funding.
Minister Shiri urged the financial institutions to honour their agreements.
He said Government will also continue negotiating with the financial sector to ensure all the outstanding areas are ironed out and farmers can access funding using the document.
“I call upon financial institutions to honour our negotiations and also to commend the splendid work they are doing in agriculture and the economy at large.
“Each time we come to an agreement that 99-year leases are bankable, but when farmers approach banks for loans nothing materialises.
“When I joined the ministry, I was made to understand that banks were accepting the 99-year lease, but on the ground nothing is happening. There is need for dialogue. Agriculture is the backbone of the economy and we should come to some agreements as soon as yesterday so that farmers can start benefiting from the agriculture sector,” he said.
He said under the Transitional Stabilisation Programme, Government envisages greater involvement of the domestic financial system underpinning the financing of agriculture.
“One key aspect of farming successfully is the availability and affordability of agricultural finance. Government remains committed to ensuring that the sector remains sufficiently funded.
“Government is revising the 99-year lease agreement with the view to improving its bankability. This will complement Government’s ongoing interventions through the Special Agriculture Production initiative commonly known as Command Agriculture Scheme and the Presidential Inputs Scheme,” he said.
Minister Ncube said negotiations should continue for the 99-year lease to be accepted by banks.
“While we are still negotiating with banks, on financing and making the 99-year leases bankable, and of course which is a credit issue for the banks, in terms of financing the programme this year, we are looking at basically providing full or partial guarantees to the banks for on lending to the farming sector to ameliorate the issues around these 99-year leases.
“We are also working on perfecting the 99-year leases and finalise discussions of the financing. We expect the banks to work with us to make sure that the farmers do pay back and reduce the default rates in the farming sector.
“This week we are having a meeting with banks in order to finalise the financing of agriculture because this is a sustainable move for the future as there is a limit to which Government can continue financing agriculture. The private sector has to step in and work with Government,” he said.
Minister Ncube said Government funding alone was not sustainable and urged the private sector to assist.
“The private sector should also get in and work with Government in the financing of the agriculture sector through Public Private Partnerships.
“In Ethiopia the agriculture commodity exchange has worked well in funding the agriculture sector,” he said.
Minister Ncube also urged the manufacturing sector to get involved in production and contract farmers to produce their raw materials for instance in soyabeans and cotton.