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situations where the state is either unable (due to fiscal constraints or excessive work) or unwilling
to completely adjudicate all rights of landholders.
2. Credit access
It is difficult to conclude from the data on existing mortgages and agricultural charges placed
on titles that registration has had a significant effect on credit access. Agricultural charges include
credit issued under the Agricultural Act for crops and farm implements. Mortgages include credit
disbursed for land purchase and long-term capital improvements. As indicated in table 1.9, mortgages
where title was secured for collateral generally remained stagnant or declined from 1989 to 1992,
ranging from a high of 879 to a low of 677. Agricultural charges have varied widely. From a high
of 10,947 charges in 1989, the total dropped to 517 in the drought year of 1991, before rebounding
to 2,137 in 1992. Compared with the total number of commercial farms nationwide (145,170 in 1989,
table 1.4), the number of agricultural charges does not seem particularly impressive. However,
compared with the 740 large-scale farms which likely possess title, the data would suggest a strong
linkage between title and credit access. Which farms are acquiring the credit is a crucial question.
There is no doubt that perceptions of title being needed to gain access to credit has been an
important factor driving leasehold demand. Discussions with two agricultural lending banks give some
insight into the perceived importance of title in enhancing credit access.
Lima Bank is a state bank with no private capital or private investors. Its principle operating
objective is disbursing agricultural credit to increase production and incomes in rural areas. Credit is
predominantly given to small farmers; 96 percent of the total clients are small farming units, 3 percent
are medium-scale farming units, and 1 percent are large-scale commercial farming units. In the current
year, the bank disbursed K8 billion of credit, 85 percent being short-term seasonal loans, 10 percent
medium-term loans and 5 percent long-term loans. Sixty percent of this credit went to roughly 18,000
smallholders nationwide. The remaining 40 percent was disbursed to roughly 3,000 medium- and
large-scale farmers. Demand for credit increased sharply around 1980 with the increase in the large
number of "emergent" farmers entering commercial agriculture. While the bank used to extend credit
without title as collateral, and still does to a limited extent, it is now reaching the point where title is
a prerequisite. In normal years, the bank experiences 30 percent loan losses on its seasonal loans, one
half of which is usually recovered through legal action, late repayments, or foreclosures on property.
Rarely has the bank had to engage in foreclosures, however. For those loans secured by title,
titleholders are reportedly extremely reluctant to part with the title once they have it and resort to
other sources to pay back loans. In the 1970s, the bank had to advertise foreclosed farms for sale or
auction. However, because of a very robust land market, the bank no longer has to advertise. A list
of potential buyers is maintained by the bank that is purportedly much longer than the supply of
foreclosed properties, and properties are liquidated quickly. 14
The Zambia National Commercial Bank has the backing of 98 percent public capital and 2
percent private capital from shareholders. The bank's agricultural portfolio is smaller than that of
" Whether this process of foreclosing on farms is good or bad is not easy to assess. There is always the possibility that farms
are resold to insiders and those with political influence. One wonders whether properties should not be foreclosed via an auction,
even if fair market value is not paid, to minimize the potential for corruption and any appearance of impropriety. Separate
sources in the ministry indicated that foreclosures were in fact nearly impossible to achieve.