Bankability of 99-year lease a welcome move

by Sunday News Online | Sunday, Feb 11, 2018 | 169 views

Mhlupheki Dube

THE pronouncement by the Reserve Bank of Zimbabwe governor Dr John Mangudya about the 99-year lease being bankable should be a cause for celebration among farmers.

If the 99-year lease can now be accepted by banks as collateral, the value of agricultural land especially among smallholder farmers who benefited from the Government land reform programme will be unlocked and its potential exponentially increased.

This has been a missing link since the allocation of the land to the indigenous people.

It should be noted that there is very little agricultural activity which can be undertaken without appropriate financial support from the banks and hence if farmers can now be able to approach banks and get loans against the value of their land it’s a major development step in the agricultural sector which needs celebrating.

However, I want to implore the powers that be to adopt a holistic approach when looking at agricultural support.

In other words, all critical components and players within the various agricultural value chains should be supported and revitalised for the whole sector to function optimally.

An example is the banking sector. The question is how ready are the banks to provide realistic agricultural loans beyond public relations and marketing rhetoric? Readers will remember that in yesteryears almost all the commercial banks had a vibrant agriculture division which dealt with processing and managing agricultural loans.

These departments were supported or manned by agricultural trained personnel for a complete appreciation of the sector.

One wishes to see a return to this state where banks were able to design and provide a product that understands peculiarities of a certain sector.

These were the times when banks understood the importance of patient capital in agricultural investment especially in the livestock sector.

It should be like today’s current scenario where banks have adopted the microfinance template of flea market funding and hope to copy and paste it on livestock production. Needless to say the result is a predictable painful relationship between the client and the financial institution.

Therefore while the Reserve Bank announces the bankability of the new 99-year lease it also needs to redirect banks towards restructuring themselves towards supporting farmers especially livestock farmers who have struggled not only to find patient funds but affordable funds as well.

Most livestock farmers are desperately in need of patient and affordable funds to stock their farms as well as investing in critical infrastructure they need. Patience is required simply because if one procures heifers it will take around three years before they start breeding and another two years before the progeny can be taken to the market and therefore financial products that have grace periods of one month can never be useful to livestock farmers.

Therefore I hope there must be a thorough thought process on how the agriculture sector can be completely and comprehensively supported in line with the thrust of improving the ease of doing business. How can we make sure our smallholder farmer has all the unnecessary hurdles of doing his/her business removed?

What is it that we need to slacken and what is it that we need to strengthen in support of the smallholder farmers? Piece meal interventions tend to fail and defeat noble intentions of the programme simply because some critical players in the value chain have been overlooked.

Therefore if making the 99-year lease bankable is aimed at unlocking value and potential of the land, other supporting sectors need to be ready and capacitated to play their part in ensuring the farmers get the help they deserve.

It is my hope that the new 99-year lease will help to improve utilisation of the farms and jump start the economy.

The call being, let the farmers access patient capital, let there be improved ease of doing business within the various agricultural sectors and hence the country can produce and flourish once more. Uyabonga umntakaMaKhumalo.

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