By Michael Tome and Kudakwashe Mhundwa
About 18 banking institutions and 140 financial institutions have to date registered to be part of the Reserve Bank of Zimbabwe’s Credit Registry, as the apex bank moves to keep the country’s credit culture in check.
The Credit Registry, which went live in 2017, addresses Zimbabwe’s ease of doing business deficiencies relating to getting credit and explores two sets of issues, strength of credit reporting systems and effectiveness of collateral and bankruptcy laws in facilitating lending.
Addressing delegates recently at a Financial Inclusion Forum RBZ deputy governor Dr Jesimeni Chipika said monitoring credit borrowing is an essential tool in keeping the country’s credit culture in check.
“As Credit Registry we are nearly there, it’s the other financial inclusion strategy initiative which we are working on as RBZ, when we are rolling out financial inclusion in the country if we don’t monitor credit behaviour it can introduce instability in the country’s financial sector.
“If people are not paying their loans we can get into problems, so the Credit Registry was introduced and we are happy to say it is being used so far by 18 banking institutions, 143 of our 200 financial institutions are already consulting the credit registry and three non-banking institutions, so the credit registry is doing very well and we are hoping that it will keep our credit culture in check,” said Dr Chipika.
Studies have shown that comprehensive data on consumer credit histories significantly reduces the costs to new lenders and may eventually enable the banking and micro-finance sectors to tap into global capital markets to obtain funds for lending.
The credit registry is part of ease of doing business reforms to improve Zimbabwe’s attractiveness to foreign and domestic investment, reduce cost of doing business, improve performance of public utilities in delivering quality service to the people as well as create value for money in providing services.
The reforms target 10 key global indices for ease of doing business and these are starting a business, getting credit, protecting minority investors, resolving insolvency, paying taxes, enforcing contracts, trading across borders, construction permits, registering property and getting electricity.
Government expects that the ease of doing business reforms help drive Zimbabwe to a higher position on the World Bank’s competitiveness rankings.
Zimbabwe slipped on the global competitiveness by one place to 126 out of 139 countries during the period 2016-2017 due difficult condition for doing business, the Global Competitive Index report showed.
Meanwhile, Dr Chipika said by the end of the year the collateral registry is expected to be operational and will enable the use of movable properties as security for financial credit from banks and other lenders.
“We are hoping that by the end of the year the collateral registry will be operational because now we have other countries that have succeeded to operationalise.
We have somewhere to learn from — we had already started as you know so we are hoping that together with the help of our development partners we should make it operational by the end of this year,” she said.