eBusiness Weekly
Tawanda Musarurwa
Zimbabwe has made significant strides in readying for white former farmers compensations, with valuations having been carried out for nine of the 10 provinces, Finance and Economic Development Minister Mthuli Ncube has said.
According to Minister Ncube, dealing with the twin issues of 99-year leases and farmer compensations simultaneously was critical for the country to be able to securitise its land assets.
“In the agricultural sector we have created a dead asset in the form of land, and we need to turn it into a productive asset. It has two sources of value, there is intrinsic value of the asset itself and then there is the productive value in terms of what you plant.
“One of the issues that needs to be dealt with is the issue of 99-year leases, there are still some work to do to close that of. That needs to be sorted because without 99-year leases we can’t create enough cover in terms of property rights for banks to extend credit to farmers on the back of the 99-year leases,” said the Finance Minister.
All things being equal, the new 99-year leases should have the same tradability as previous title deeds for commercial farms, which will allow them to be negotiable on the land market.
Although the Government has since announced significant improvements on the 99-year leases to enhance the security of tenure of the lease and making it bankable and transferable, their use appears to have been hindered by the lack of an effective land market, which will ensure that banks can easily trade the title deeds to recover loans in case of defaults.
The elephant in the room
“But there is a bigger elephant in the room, that is, farmer compensation. I must say that is an issue that I am currently seized with and I am very pleased to say that we as Government have made a lot of progress,” said Minister Ncube.
“First of all, the farmers themselves have made a lot of progress as they now have a figure of what they want to be compensated for improvements. And on our side as Government we have done valuations for nine provinces and we know the values of the improvements and we are using the same methodology. So we have covered nine provinces and what’s left is Mashonaland East, which we have run up to around 70 percent. We should be able to conclude the evaluations by end of March.
“Only then can we start debate about securitisation of the land, because on the one hand you have an asset, which is the land, and on the other we have the farmers and is we have a balance sheet like that we can switch to corporate finance mechanisms to compensate the farmers and launch a land bank. But the first order of business are the 99-year leases.”
Economic commentator John Robertson says addressing the land issue is the single biggest factor in restoring the land and agriculture back to its productive state.
“Let’s get back the land on the market so that banks can be able to go to international financiers with a strong security and be able to access concessional loans.
‘‘Why are we trying to hold on to a disability when we could simply wake up tomorrow and announce that the land is back on the market,” he said.
