Zimbabwe Could Soon Accept Livestock as Loan Collateral
The Reserve Bank of Zimbabwe will soon establish a collateral registry for movable property to enable the economy’s informal sector mostly made up of small businesses to use movable property including livestock and vehicles as security against loans from banks. Zimbabwe’s economy is now dominated by informal businesses following the contraction of the formal sector between 2000 and 2008.
The Movable Property Security Interest Bill presented this month by the Finance Minister, Patrick Chinamasa aims to make it easy for the small businesses to access funding from local banks. Most small businesses are not in possession of the immovable property the local banks require as security.
“The Reserve Bank of Zimbabwe Act will be amended to achieve the objective of this bill, and the assets to be considered include any type such as machinery, motor vehicles, livestock, and accounts receivable,” said the Finance Minister, Patrick Chinamasa.
Loans to small businesses amounted to USD 250 million in the year to date out of total bank loans of nearly USD 4 billion which is an indication that there is need for local banks to adjust their lending policies in favour of such small businesses.
Other countries including Liberia, Ghana, Malawi, Kenya, Lesotho, Peru and Ukraine have adopted the same model to increase lending to small businesses.