HARARE, October 5 (The Source) – Zimbabwe’s banks say government needs to resolve issues around land tenure to unlock funding for the agriculture sector while a successful reengagement process with the international community will be crucial for the long-term sustainability of the industry.
Bankers Association of Zimbabwe president Sam Malaba told The Source last week that banks were availing nearly $1 billion to farmers for the 2015/16 season — similar to the previous season — but this was for working capital while the sector was is desperate need for retooling.
Nearly 15 years President Robert Mugabe’s government seized land from about 4,000 white farmers without compensation and gave it to thousands of blacks under a redistribution programme — which the veteran ruler says was meant to address colonial imbalances — the is no security of tenure for the beneficiaries of the exercise.
“It would help if the issue of land tenure is resolved, and it has to be resolved to the satisfaction of all the parties,” said Malaba.
“Basically at the moment we have not agreed with government on the use of the proposed 99-year leases as security so banks are demanding other forms of security from borrowers.
Last Monday finance minister Patrick Chinamasa said at a meeting with the European Union unresolved issues around property rights, including the ownership of land by resettled farmers needed resolution.
“For me, we have always respected property rights, especially in the urban areas but on land acquired under the land reform exercise, that has not been the case. The (resettled) farmers need to know that they own the land without the fear that they could be kicked out any time,” he said.
Malaba said financial support for the sector was largely limited to tobacco and sugar cane.
“We are spending about $1 billion in agriculture in the coming season and to a large extent we are supporting the tobacco sector because its value chain works and loans are repaid. We are also support the sugarcane sector because again the value chain is very successful.” he said.
“Where the value chain is successful, the banks will provide funding but the challenge we have is that the funding we have is short-term so it is really for working capital and not so much about recapitalising the farming sector.
To fully recapitalise the sector, Malaba said local banks needed access to long-term capital, adding that the success of current reengagement efforts with international creditors was crucial.
Zimbabwe owes foreign creditors about $10 billion and will present and seek support for its strategy for arrears clearance on the sidelines of the annual meetings of the World Bank and the International Monetary Fund in Lima, Peru on Thursday.
“Once (Zimbabwe) deal with the arrears for the World Bank, IMF and AfDB and put forward an acceptable payment plan, then we (banks) can access new funding, and funding from these institutions is medium to long term as is that from the Paris Club. So this re-engagement process is critical just as is attracting Foreign Direct Investment,” said Malaba.