Farmers yet to use 99-year leases as collateral
THE Zimbabwe Commercial Farmers’ Union (ZCFU) says it is yet to get a “concrete” agreement from the Bankers’ Association of Zimbabwe allowing farmers to secure loans from banks using the 99-year lease agreements as collateral.
Cabinet has approved a proposed law to offer farmers 99-year leases and allow them to borrow from local financial institutions to buy critical farming inputs.
Under the arrangement, the leases would apply to medium and large scale farmers that have in the past not been able to secure loans from the local banking sector for vital inputs such as seed and fertiliser.
ZCFU president Mr Wonder Chabikwa told Business Chronicle in an interview yesterday that it has been sometime since it was announced that the 99-year lease agreements were now bankable but the farmers were yet to use them.
“It has been quite a number of occasions where we have heard that the 99-year leases are now bankable but as farmers we never got a concrete agreement from BAZ that we can use the lease agreements to secure loans from the banks,” said Mr Chabikwa.
“The last time we heard about them (99-year leases) becoming bankable was in March or April this year. However, we are still not using them because BAZ has told us that it has not reached a point when the lease agreements can be used as collateral when borrowing.”
Mr Chabikwa said failure to use land as collateral to borrow was impacting negatively on the farmers’ efforts to improve production.
“Even if we are to borrow using the 99-year lease agreements as collateral, the money is expensive which means the loans are not suitable for farming as lending rates are pegged between 12 percent and 18 percent,” he said.
Mr Chabikwa said lending rates within the Sadc region were pegged at between four and 10 percent and this, coupled with subsidies, was making farming viable.
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Mr Wonder Chabikwa