Farmers advised to extend collateral space
FARMERS have been advised to extend collateral space by surrendering immovable property as security when borrowing loans to finance production amid concerns banks are still not accepting the 99-year leases.
Despite a recent announcement by Government that farmers with 99-year leases can now access loans from banks to finance agriculture, it emerged during a plenary discussion at the just ended Confederation of Zimbabwe Industries (CZI) annual congress and international investment forum in Bulawayo that the 99-year leases were still not admissible.
Industrialist, Mr Calisto Jokonya, accused farmers in Zimbabwe of not taking farming business seriously as they could use their houses as collateral security to access funding from banks.
“I just think that ourselves as businesspeople we are not going out of our way to think of ways and means to come out of our challenges. If you were the banker lending money, given the land situation in Zimbabwe, you wouldn’t be very brilliant to differ.
“All these farmers we are talking about in Zimbabwe have houses in the country and yet they don’t want to mortgage them because they are not serious about farming,” he said.
“I think there are many ways they should be looking at it as farmers themselves if they were serious about taking this business very seriously. At one meeting that we attended, we were told that 99-year leases were now being accepted and I was shocked when Hammond (CABS managing director) raised that it still needs panel beating.”
The Bankers’ Association of Zimbabwe has said financial institutions were committed to supporting the agriculture sector but would assist only those with viable farming projects and valuable infrastructure. Those eligible for the loans include farmers who own houses, sheds and mounted irrigation equipment. Farm addresses are taken as proof of residence at account opening.
An official from the Industrial Development Corporation (IDC) of South Africa, Mr Thokoane Tsolo, added his voice saying it was his view that there was a need to extend collateral space to cover immovable property for farmers to finance their activities.
“From my side I don’t see why not extend the collateral space to cover immovable assets because at the end of the day if you don’t pay your debt, the collateral security submitted to the bank upon securing a loan will be forfeited,” he said.
Former CZI president Mr Kumbirai Katsande said the issue was not about owning land, but access to use the land.
“We seem to be stuck on this ownership issue and yet elsewhere people are now securitising the leases to unlock value in the market,” he said.
The agriculture sector is one of Zimbabwe’s economic mainstays and in recent years, it used to supply over 60 percent of inputs needed by manufacturers while consuming about 40 percent of manufacturing output.
The sector accounts for over 16 percent of Zimbabwe’s Gross Domestic Product ( GDP) while being the single largest forex earner. — @okazunga