What were the effects of the land reform program in Zimbabwe on bank lending?

Answer 1

land reform program was adevelopmental initiative by the gvt of Zimbabwe basding on the objective of 3rd chimurenga.this reform process resuted in a number of effects in many sectors of the economy some of them negative some positive. zimbabwean economy is agricultural based.this means that most of the lending by financial instituitions was towards the agric sector.demobelisation of commercial farmers by the gvt resuted in new players entering the sector.these new players(any zimbabweans)are not well vested with collateral security for use in borrowing to kick start production.this left banks in aprecarious position as their normal procedures for disbursing loans was greatly affected. business of lending became riskier resulting in reduction in lending & increases in finacil market activities. bank lending was also shifted from over concentration on agric to other sectos of the economy .those who managed to access funds from banks failed to pay up their debts due to drought & also incidences of inexperience in farming.the economy also became riskier resulting in many banks issuing short term loans fearing the unknown.it cld have been an opportunity for banks to expand business of lending if the new land owners were capable to garantee their loan applications,but that was not the case. bank lending was also diverted to the export sector as the land reform brought massive shortages of basic commodities.this was mainly due to subotage by local oparaters who wereagainst the process of land reform & also because of decreases in production because of reasons alread alluded to.theirfore the export sector represented an opportuniy for the banking sector to make business.