PARLIAMENT is crafting a law that will enable businesspeople to borrow from banks using assets such as machinery, motor vehicles inventory, livestock and even accounts receivable.
by VENERANDA LANGA
Finance minister Patrick Chinamasa (pictured) yesterday brought the Bill before the National Assembly.
During its Second Reading Stage, Chinamasa explained that the law would allow movable property to be used as collateral or security for purposes of obtaining loans in order to allow a wider demography of citizens to access credit and also spur enterprise development in the country.
“The initiative entails establishment of a collateral registry and enables individuals and businesses to utilise their movable properties for borrowing,” he said.
“It promotes availability of credit by diminishing risk assumed by lenders as they may bond movable assets as collateral and dispose of them when the borrower defaults.”
The Finance minister said the majority of Zimbabweans, including SMEs, cannot access credit due to lack of acceptable security in the form of immovable properties such as houses and factories, which are preferred by traditional lending institutions.
“This Bill seeks to close that gap and will provide a platform to inform parties and the public about the existence of security interest in movable properties. A Collateral Registry will be established as a department in the Reserve Bank of Zimbabwe (RBZ),” he said.
Chinamasa said laws such as the Deeds Registry Act, Agricultural Finance Act, Grain Marketing Act and others would need to be harmonised with the Movable Property Security Interests Bill, and the RBZ Act amended in order to provide for a holistic approach towards utilisation of movable properties as collateral.
“The registry will be funded through lending fees, charges for registration, amendment and cancellation of notices and others. The Bill will promote financial inclusion to small and medium enterprises, women, youths and other under-banked groups. It will increase access to credit and improve competition in the financial sector,” he said.
Chairperson of the Parliamentary Portfolio Committee on Finance, David Chapfika said the majority of Zimbabweans were failing to secure bank loans as they had no collateral in the form of title deeds.
“Members of the public said the cost of registered notarial bonds is prohibitive and discouraging investors. They said the registrar must be a public officer and that the Registry Office must be decentralised,” he said.
Leader of the opposition in the National Assembly, Thokozani Khupe suggested the law should ensure women are allowed to use their husbands’ properties as collateral.