Economists and analysts are urging Harare to revise the 99-year farm leases it began to issue in November, saying a clause that lets it revoke the leases on short notice will make it hard for farmers to secure loans from banks using a lease as collateral.
President Mugabe has urged commercial banks to write loans to resettled farmers but financial institutions continue to see such loans as too risky.
Resettled farmers including some senior government officials have not repaid loans to state institutions including the Central Bank and Agri-Bank. Banking sources said the experience of Barclays-Fincor, Zimbank-Syfrets and the African Banking Corporation, which made loans totaling $37 billion dollars to the Kondozi collective farming project in Odzi, Manicalanad Province, has discouraged further such lending.
The horticultural concern was invaded and seized in 2004 by senior officials with help from the army, and the banks lost their money despite court rulings in their favor - the orders were ignored and farm equipment was allegedly looted by senior officials. The Kondozi operation used to turn over UZ$15 million a year before its seizure.
Political analyst Ernest Mudzengi of the National Constitutional Assembly said Harare could find it hard to redraft the leases as land policy has become a matter of political expediency rather than a rational approach to reviving the agricultural sector.
Economist Eric Bloch told report Blessing Zulu of VOA's Studio 7 for Zimbabwe that banks do not have confidence in the collateral value of the leases as drafted.
More reports from VOA's Studio 7 for Zimbabwe...