Commercial Farmers Union of Zimbabwe

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Govt’s lease somersault no respite to white farmers

Govt’s lease somersault no respite to white farmers

 

GOVERNMENT’S recent policy shift to grant the few remaining white farmers in Zimbabwe with 99-year land leases does not address the inherent structural flaws of the legal instrument, which still remains unbankable and untransferable, discouraging investors from venturing into agriculture.

By Tinashe Kairiza

Last week, breaking with the entrenched policy position of the previous government, President Emmerson Mnangagwa’s new administration announced it would extend 99-year leases to the remaining 200-odd white farmers who are still tilling the land in the country.

Since 2000 when the government sanctioned violent land grabs targeting white farmers, it only issued 99-year leases to beneficiaries of the land reform programme.

Before the latest policy somersault, remaining white farmers in Zimbabwe were granted only five-year land leases which were reviewed periodically. Although the new development offers white farmers some respite after two decades of working under a cloud of uncertainty, the 99-year lease they hold is still as bad as the same unbankable and untransferable instrument granted to their black counterparts.

Politically, the issuance of long-term leases to white farmers with the leases will add impetus to Mnangagwa’s diplomatic charm offensive meant to re-engage Zimbabwe with the international community, after almost two decades of ruinous isolation.

But on the economic front, the 99-year lease granted to white farmers will not convince finance houses to extend fresh investment capital to a sector which has immense potential to revive Zimbabwe’s fragile economy. In its current state, the legal instrument does not give landholders exclusive title and tenure to the land they occupy.

All land remains state land, and government, at its discretion, can expropriate farms allocated to beneficiaries anytime.
The net impact of the 99-year lease is that banks have been reluctant to extend working capital to farmers. Inversely, the lease holders are also hesitant to significantly develop their farms, since the government, without notice, can expropriate the land.

Fadzayi Mahere, a lawyer and politician, advanced the same compelling argument last week, exposing the legal frailties of the 99-year land lease.

She says as long as the leases remain in force, land allocated by government in 2000 will remain a dead asset — without capacity to attract investment.

Government’s sincerity in attracting investment to agriculture and give land beneficiaries unquestionable security of tenure can only stand if Mnangagwa’s administration repeals the legal instrument.

“From a purely property law perspective, a lease does not confer a real right, enforceable against the whole world in the way that title deeds do. A lease is a mere contract affording only personal rights. A lease does not confer ownership and is a legal relationship that is capable of being terminated on good cause shown under law,” Mahere said.

“There is a misconception that these leases will be able to stand as real security for bank loans and other mortgages. The unfortunate reality is that long leases won’t improve a lessee’s ability to borrow money from a bank.”

As at September 2017, the Bankers’ Association of Zimbabwe (BAZ) had extended US$620 million to the agricultural sector, constituting about 17% of cumulative bank lendings to the private sector.

The writing is on the wall. Farmers attribute the low bank lendings to the unbankable and untransferable nature of the 99-year lease.

Last year, in an interview with the Zimbabwe Independent, Zimbabwe Farmers’ Union (ZFU) executive director Paul Zakariya noted that government’s reluctance to repeal the 99-year lease and extend full title deeds to land beneficiaries was spooking investors.

“We are now talking about an active land market. If we do not have an active land market this land will not have value and nobody is going to lend to someone who has an asset which has no value. The problem is not with the bank, the problem is with the instrument itself.

“The 99-year lease in its current form will not give comfort to financial institutions so they will not accept it as security,” Zakariya said.

Economic analyst Muchesa Chatsama said beneficiaries of the land reform programme were mere tenants on the land and could not use that privilege to acquire loans from finance houses.

“The bankability of the land can only be possible if occupiers are given full ownership which I do not see happening due to the contentiousness of the land issue in this country. Bankers will have to use other means of accessing creditworthiness other than these useless sugar-coated 99-year leases,” Chatsama said.

“I do not see it happening (viability of 99-year lease) because it has been given to white farmers. If it does work for white farmers it will certainly be due to other considerations other than the bankability of 99-year leases.”

He said the land would work as “collateral” if it is tied down to title deeds.

Rhodes University visiting political science lecturer Mike Mavura argued that apart from revising the 99-year land instrument, it was imperative for government to also address other “inconsistencies” that accompanied the agrarian reforms, if agriculture is to return to a firm growth path.

“The politics around land since the land reform process in Zimbabwe began and the inconsistencies around it as well as the lack of legal recourse over land invasions or seizures means that land is firmly in the high-risk profile category of many financial institutions,” Mavura said.

“Although the new government might be well-intentioned with a sober approach around revisiting land and the indigenisation policies, there is still a long way to go in policy symmetry between government, business and the society.”

He said no financial institution would extend loans against an asset they cannot “repossess or recover”.

In essence, the goodwill gesture to grant white farmers 99-year leases will only help thaw relations between Zimbabwe’s new government and the West. And for once, the remaining white farmers, many of them Zimbabwean by every measure, will also feel a sense of justice and perhaps closure to the emotive land question. But beyond that, re-aligning the country’s fragile agricultural sector on the firm growth trajectory would require discarding the 99-year land lease which, for now, remains unbankable and untransferable, rendering land a dead asset.

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