Zimbabwe's reserve bank governor, John Mangudya, has reportedly said that local banks have agreed to finance farmers after government tweaked the country's 99-year land leases to be "transferable and bankable".

According to the state-owned Herald newspaper, farmers were now going to be able to use their farms as collateral when taking loans, following the landmark development set to change the agricultural sector.

The southern African country’s financial institutions were previously refusing to lend money to farmers, arguing that they were not transferable in the event that the farmers were unable to repay their loans.

But following talks with government, the Reserve Bank of Zimbabwe and the bankers, it was agreed that the 99-year-leases were now bankable.

"In line with the current economic dispensation’s aspirations to transform agriculture into viable business proposition and taking into account the significant improvements made by government on the 99-year leases to enhance the security of tenure of the lease and making it bankable and transferable, the [Reserve] Bank has agreed with banking institutions for them to accept the 99-year-leases as security for accessing credit from financial institutions in line the provisions of the leases," Mangudya was quoted as saying.

He said that if government decided to take someone’s farm, the banking institutions as financiers would be compensated.

Right direction

This came a week after Zimbabwe’s white farmers said that they remained cautious over the country's new land policy, which now allowed them to lease the land for 99-years.

Under ex-president Robert Mugabe's government white farmers were allowed to lease the land for only 5-years.

But, Emmerson Mnangagwa's government has scrapped that policy, with the country's eight acting provincial resettlement officers being told recently that "there should be no more restrictive 5-year leases to white farmers".

The Zimbabwe Commercial Farmers' Union (CFU) director, Ben Giplin, said that the new government criteria on who will get land sounded "narrow for now".

Giplin said, however, it was an important step in the right direction for the new administration to change the country's decade old land policy.

Thousands of white commercial farmers and their employees were displaced and left without sources of income during the fast-tracked agrarian reforms that were masterminded by Mugabe's administration in 2000.

According to the CFU, more than 4 000 white farmers were affected by the often violent farm invasions.

Some of the white farmers that were kicked out of their properties during the agrarian reforms have now set base in neighbouring countries such as Malawi, Mozambique and Zambia.