Financial institutions have turned down a request by Matabeleland region farmers to accept as collateral their 99-year land leases in their loan applications.
By Our Correspondent
The banks argue the leases are not bankable.
Speaking in Bulawayo last week at a meeting for players in the agriculture industry and financial institutions organised by a local non-governmental organisation (NGO), farmers demanded that banks accept the leases as security.
However, BancABC Retail Banking official in Bulawayo, Joel Zidya said “that issue is still sensitive”. He said banks were reluctant to use land as collateral as most of it was in bad shape and therefore not bankable.
“From the side of the bank, when we say we want collateral, we prefer something that is bankable, so that when we give money to you and you fail to pay back the loan, we can take the bankable collateral to recover our money,” said Zidya.
He said there were also issues that were still pending at government level before the 99-year land lease could be used as security.
“When we look at the 99-year lease, there are issues that have not been concluded,” he said, adding that most of the land was not bankable due to its poor quality.
“For example, if we give you US$80 000 and you fail to pay that money, we cannot take that 99- year lease. And even if we get the land, we cannot sell that land for US$80 000 because at times if you go to that land, there is a dip tank which was last used some 20 years ago and things are falling apart every day,” said the official.
“So those are the challenges and it’s an issue that is being studied at a very high level and probably a breakthrough will be found,” said Zidya.