Farms worth $15.6m grabbed by Stanbic Bank at Mkushi farm block put up for sale
At a time when the country is looking to be falling back on commercial farmers to grow winter maize to cover the wide gap left by severe damage to rain fed crops grown by mostly local small scale farmers, Stanbic bank has put out for sale, the repossessed seven high value commercial farms.
Stanbic bank has put out a notice for sale of commercial farms by mortgagee in possession on 6 March 2024. But the timing of the sale has come under question as the country is currently experiencing a severe drought and a state of national disaster has since been declared.
The South African lenders local unit in Zambia has put out for sale, the seven (7) repossessed commercial farms which have a total of 11 parcels of land, based at Zambia’s leading Mkushi farming block area of central province, a move that has shocked Agri-bussiness players and disaster mitigation experts, on options available to mitigate the drought impact.
According to a notice of sale of repossessed farms seen by the Zambian Business Times – ZBT, Stanbic bank has put out for sale the reposessed farm no. 2388, off great north road, Mkushi farming block worth about $4 million (about K100 million), another farm no. 2975 worth about $2.9 million.
Others put out for the sale off are farm no. 2987, farm no 3087, farm no 3490 to 3493, farm no 3500, farm no. 3502 and farm no 3145. All the eleven (11) parcels of land have a combined reserve value of $15.6 million (about K390 million).
The reserve price pegged by Stanbic Bank are grossly exaggerated and may indicate that the bank is working with highly inflated valuation figures as similar un-distressed farms for sale in the same area are selling for far much less.
When ZBT contacted Mkushi Farmers Association to find out why such a big number of farms had been repossessed over loans to Stanbic Bank, Association chairperson Miklos Murffy told ZBT that he has not engaged the specific farmers involved but confirmed that the low rainfall also adversely affect commercial farmers as dams don’t get filled to support the winter crop.
Murffy revealed that Mkushi commercial farmers are also facing significant challenges as a result of this draught that has hit Zambia. Most loans are contracted with repayments based on two crops. So when one crop fails mostly due to weather like drought, the repayments for loans become difficult.
On repossession, the Associations chairperson said that Zambia needs an institution like a land bank that can lend long term at low interest rates. The commercial banks seem to ignore some of the challenges like the long term nature of Agri-businesses.
He indicated that the interest rates that are obtained in Zambian banks are relatively high and come to about 12% for US dollar denominated loans. This is high when compared to other Agro producing countries and the returns farmers get.
The other challenge is that the banks are only lending for about 5 to 6 years, but farming is long term. Zambian commercial farmers also need access to long term and lower interest loans if farming is to grow and deliver its potential.
Farmers need loans that are for say 20 to 25 years, that can enable them to invest in dams for irrigation, centre pivots and drag irrigation systems, storage and other farm buildings and equipment, all which take a long time to get true value and repay back the loans.
Efforts to get a comment from Stanbic bank on the timing of this action and it’s impact on drought disaster mitigation plans were underway by press time.
-Zambian Business Times
What’s the connection between failing to fulfill loan obligations so called hunger situation in the country. The borrowers defaulted long before this current situation. Banks are not a charity or DMMU.
This is just a business transaction. When you don’t pay your loan then your property is repossessed. Either stop getting loans or have contingency plans to repay including drought insurance.
Well said Razor. This is a personal arrangement between two parties. Why are you butting yourself into their business?
We want to trivialise and politise everything.
Long term ? The two should have asked for a long term loan. When writting their proposal to the bank, the mortgagees lied. Pure and simple. They lied to the bank about the viability of their plan and defaulted. The bank is in business. Any contigencies that the mortgagee failed to undertake are his/her own derelection to the mortgage.
People need to learn to be prudent and conservative in their approach to business. Business has a set of rules that are subject to laws.
Read the other day how “street kid” was trying to socialise and politise the law. The Munyaule market isssue and this are similar. A contract was signed by the owners of the land(Council) and Contructor (leasee). Terms of reference were agreed. After notice was given to you to vacate you want to cry foul. Do you have a contract or lease with the council? No. Even if you did, they served you notice.
That injunction who was it served on? The judge that signed the injunction should have looked at the facts of the case and refused.
Development is frustrated because of legal processes that do render justice at the end of the day. Cholera victims was justice rendered to them? The council at the end of the day may end up being used for negilgence but how do they efforce they law when they are frustrated by the same public with their wantoness? Laws and regulations exist for a reason.
Sued for negligence…I mean to say not used