GOVERNMENT will in the next few months make 99-year leases to resettled black farmers bankable, a top government official has said.
Zimbabwe's financial institutions roundly refused to acknowledge them as collateral.
Government in 2006 issued 99-year leases to resettled black farmers after a land redistribution exercise at the turn of the millennium. However, banks have steadfastly refused to use them as collateral, arguing the leases are not bankable as the land could be forfeited by the state at any time. But government refused to make the land bankable.
This resulted in low production as banks would not fund agricultural operations on new farms.
Agriculture deputy minister Vangelis Haritatos told businessdigest this week that government have resolved to "compromise" on the bankability of 99-year lease, saying interest rates will remain high until there is bankability of the lease.
A 99-year lease is a legally binding agreement between the Ministry of Lands, Agriculture and Rural Resettlement on behalf of the government, which is the lessor and the farmer, who is the lessee.
Farmers are still struggling to get access to credit as most financiers say the original 99-year lease document is not legally acceptable.
Haritatos recently told businessdigest that the few issues that banks want ironed out are a "challenge" to the government, but he was hopeful that common ground would be found in the next few months.
"They want transferability and that kind of stuff, they want the lease in the definition of a 99-year lease, they want more like a title and we as government are saying all the land belongs to the state. We are not going back to the title so that it's transferable. So that is basically the sticking point," he said.
"You recall that a few years ago we had what we thought was an agreement. The banks came back to us and said we have changed our minds. There are a few things that they are requiring, but there are also certain things that are challenging on our part also.
"Right now we are still engaging with the banks and we hope that in the next few months it will finally be resolved and finally bring bankability to our 99-year leases and that will also allow government to continue issuing on the basis that banks will accept it. We, however, have to come to a compromise. We have to meet in between."
Haritatos said the banks had made Zimbabwe a high-risk country and, until there is bankability title to the leases, high interest rates will remain in place.
"Right now the banks have put us, let's say, a higher risk country and therefore the interest rates will remain high until someone can give what is 'bankable' to the banked himself. It's an ongoing and very difficult process that's probably what people are frustrated that it's taking long, but we are working day and night with the banks".
The failure by farmers to get loans has contributed to the failure by the country to be self-sufficient in terms of food production.
Finance minister Mthuli Ncube earlier this year said that the process of modifying 99-year leases to be bankable instruments needs to be brought to finality so as to unlock funding to the agricultural sector and make it more productive.
Zimbabwe's land tenure and title deeds system was disrupted and thrown into chaos by the haphazard and violent land reform programme which started in 2000 with massive land invasions and associated violation of property rights and the breakdown of the rule of law.
Agriculture was the country's economic mainstay, hence partly the economic ruin, poverty and suffering.