MICROCAPITAL BRIEF: Agribank of Zimbabwe to Accept 99-year Land Leases as Collateral, Boost Lending to Tobacco, Fruit, Oil-seed Growers

The government-controlled Agricultural Bank of Zimbabwe (Agribank) recently announced that it will begin lending to farmers using 99-year land leases as collateral. This follows an update to local regulations that makes the leases transferable, for example in cases of loan default. The move gives leaseholders access to a pool of USD 105 million that Agribank has budgeted for lending to farmers for the 2018-2019 season.

Agribank is also developing partnerships to issue wholesale loans to intermediaries such as the Tobacco Industry and Marketing Board (TIMB), the Tobacco Research Board, Best Fruit Processors and one or more unidentified organizations serving oil-seeds growers. This includes a planned USD 42 million for the tobacco sector. Of this total, TIMB would borrow USD 28 million to on-lend to 18,000 farmers to buy “seed and fertilizer, motorbikes and technical services.” These loans, which would not require collateral, would be directed to farmers that each farm about one hectare of land.

Agribank has 40 branches in the country and offers lending and deposit services. It also acts as an insurance agent for Old Mutual Zimbabwe, which was formerly known as RM Insurance. Old Mutual Zimbabwe is a unit of Old Mutual plc, a UK-based insurer with operations in 21 countries on five continents.

Sources and Additional Resources

The Herald (Zimbabwe) article
https://www.herald.co.zw/agribank-offers-loans-on-99-year-leases/

Old Mutual Zimbabwe
http://www.oldmutual.co.zw/

Old Mutual plc
http://www.oldmutualplc.com/

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