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Leases won't ease agriculture woes - experts
Ray Matikinye, The Zimbabwe Independent
November 17, 2006

http://www.theindependent.co.zw/viewinfo.cfm?linkid=21&id=8812&siteid=1

THE unveiling of the 99-year leases by President Robert Mugabe last week may instil confidence in the new tenants but still leaves yawning gaps in the basic fundamentals required to resolve the emotive land question.

President Mugabe last Thursday handed over 125 leases to mainly new black farmers who included a high court judge, a top state media journalist, retired army officers, and a handful of whites regarded as supporters of the ruling party. An opposition MP was among the first batch of recipients.

"The issuance of the 99-year leases is a critical milestone in the implementation and finalisation of the land reform programme," Mugabe said. "The government has demonstrated that it will not go back on the land reform programme."

Mugabe said the fact that the 99-year leases were registrable with the Deeds Office as was the case with title deeds would help farmers secure bank loans and enable any money lenders to recover monetary obligation in the event of a lessee defaulting.

"It is from these major provisions of the lease agreement that I can confidently state that for the farmer, the agreement offers the ultimate security of tenure," Mugabe said.

But there is lingering scepticism in the banking sector over the security of their loans.

Land reform analyst Professor Sam Moyo said although the lease qualifies as collateral in securing loans it could not be treated as a wholesome solution to the land question since it is subject to different interpretations by the various stakeholders.

"By virtue of the lease being registrable in a deeds registry in terms of the Deeds Registries Act, the lease can be used as collateral," Moyo said. "However, banks can interpret it differently and with scepticism stemming from the controversy surrounding compensation plus the general uncertainty rocking the agricultural sector."

Moyo said compensation disputes have not been resolved and they have been the central issue on virtually all pending court challenges including at international tribunals.

Moyo said the lease system was prevalent throughout the world but government needed to improve the capacity of the Land Board to enable it to deal with the administrative side of the leases.

Despite all the jubilation and fanfare that accompanied the 99-year leases and pronouncements by government that the documents would help them scale the financial hurdle of collateral demanded by banks, major banking institutions professed ignorance about the content of the leases.

Officials from both Agribank and Barclays Bank said they had not seen the lease agreements to enable them to judge their strength as collateral.

"We have not seen the lease agreements and what they provide for. If you have any copies please kindly provide us with one," said an official from Barclays Bank.

Barclays is still stung by the loss of a lot of its money advanced to Kondozi Estate as loans for capital projects and assets which were subsequently looted by senior government officials.

The ignorance in the financial sector effectively means that the leases are not going to be a quick-fix to the holders this agricultural season, unless government makes contingent arrangements to assuage bankers’ fears.

Farmers organisations said although the leases would temporarily stabilise the situation on the ground, the issues of compensation remained unresolved and might make the new owners liable to compensation for the property they would have moved onto.

"There is confusion on what is going to happen to evicted farmers who have not been compensated when their land and improvements are permanently taken over through a lease," a Commercial Farmers Union spokesman said.

Speaking during a recent parliamentary committee hearing Chivi South MP Charles Majange questioned why the ordinary taxpayer should be made to pay compensation for a property taken over by an individual. He suggested that beneficiaries of the land reform should themselves pay for what they now own.

Majange’s views were supported by Gutu Senator, Retired General Vitalis Zvinavashe, who said those who took over farms should be made to compensate the former owners for the amenities they now enjoy.

The lease allows the new owner to purchase existing improvements on the farm, which improvements can be used as collateral for borrowing from financial and other institutions.

Zimbabwe Association of Tobacco Growers president Julius Ngorima said although the lease gives confidence to the farmer and encourages financial institutions to consider loan applications, it doesn’t provide an overnight solution to the free-falling production.

"The lease only gives security of tenure but does not guarantee improved production," Ngorima said.

Presenting the leases last week Mugabe said the rest of the land would be administered through formal state promisory land grants.

"Security of tenure for A1 farmers will be resolved through the issuance of usufruct permits," Mugabe said. The permits would operate along the same lines as the communal area type of customary tenure.

Conservancies, trophy hunting safaris and game reserves would be governed by statutory tenure in the form of 25-year leases.

A copy of the 99-year lease agreement in the hands of the Zimbabwe Independent indicates that A2 farmers will now be charged annual rentals for the improvements on the property for a period of 25 years. The lessee would also be required to pay a lump-sum deposit before signing the lease.

In addition to paying rent the farmers would be required to pay all levies, fees and charges as may be determined by the local authority.

"An annual rental shall be payable on or before the 1st January of each and every year during the currency of this lease. The rental may be reviewed and increased annually by the lessor by such reasonable amount as the lessor may determine," reads the lease document.

"The development plan should include provision of access roads suitably sited, constructed and protected against erosion as approved by the principal director responsible for Lands and Rural Resettlement."

The lease bars people from subletting the farms to other operators without the approval of government.

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