99-year leases should facilitate land market: CFU

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Reserve Bank of Zimbabwe Governor Dr John Mangudya

BH24 Reporter

HARARE – Tradability of agricultural land is a critical factor in ensuring its effective use, the Commercial Farmers Union (CFU) vice president Andrew Pascoe has said.

Pascoe said the new 99-year leases should have the same tradability as previous title deeds for commercial farms, which will allow them to be negotiable on the land market. 

He said constrained financing was currently the “single biggest factor” facing Zimbabwe’s agriculture sector.

“Without doubt agriculture is based on the land. Historically the success of commercial agriculture and at the same time parts of communal agriculture was based on that security of tenure that we as commercial farmers had from our title deeds.

“There were certain rights that were associated with the title deeds, which have not been passed on to the beneficiaries of the land reform programme. We had the right of use of that land, the right to trade that land, there was a market. Until there is a mechanism for those rights to be passed on to the beneficiaries of the land reform programme it is very difficult for agriculture to rise where it should be,” said Pascoe.

He was speaking at an African Development Bank (AfDB) engagement with the private sector recently.

Announcing the 2018 Monetary Policy Statement, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya said bankers were now ready to lend to farmers who were holding the 99-year leases.

“In line with the current economic dispensation’s aspiration to transform agriculture into viable business proposition and taking into account the significant improvements made by Government on the 99-year leases to enhance the security of tenure of the lease and making it bankable and transferable, the bank has agreed with banking institutions for them to accept the 99-year leases as security for accessing credit from financial institutions in line with the provisions of the leases.”

But their use appears to have been hindered by the lack of an effective land market, which will ensure that banks can easily trade the title deeds to recover loans in case of defaults.

The CFU vice president said all things being equal banks should be able to sell these leases on the market in the event that holders default­ed on loan payments.

“There are things that we can do to help us in the short-term, but for the long-term sustainable development of agriculture there has to be that assurance that whoever borrows money and puts it into infrastructure, he is going to be able to reap the benefits of it; that the lending institution is going to be secure in the knowledge that if the person, for whatever reason, doesn’t manage to pay, they will be able to recover the money that they would have loaned.

“From a farmer’s point of view – and that’s across the board – land has to become productive it has got to have a value and that is a challenge, and we look forward to some strong policy decisions coming post-elections so that all those on the land can go forward with confidence that they can develop and their investments will be secure.

“That is the single biggest factor in restoring the land and agriculture back to its productive state. The other things follow from the fact that you have land that you can trade and has value.”

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