RBZ moves to implement collateral registry

Published: 09 September 2017

The Reserve Bank of Zimbabwe (RBZ) has started the process to establish a collateral registry that enables people to come forward with movable property such as cattle, vehicles and house property as collateral, a senior official has said.

Collateral registry is primarily a database of movable assets taken by lending institutions as security.

RBZ chief bank examiner Ruzayi Chiviri on Thursday said the central bank was in the process of developing regulations that will operationalise the credit registry after President Robert Mugabe had assented to the Movable Property Security Act.

"We are working with the World Vision on procurement and development of the collateral registry software," he said at the Zimbabwe Microfinance Workshop, adding that the central bank will soon be training of banking institutions, microfinance institutions and key stakeholders.

The collateral registry, which allows the use of movable collateral, enabling borrowers leverage their movable assets to obtain credit, is expected to be critical in developing small and medium enterprises (SMEs).

SMEs make up 70 percent of Zimbabwe's economic activity and contribute more than 50 percent to the gross domestic product, according to officials, but continue to face challenges when accessing financing from banks which only consider immovable property as collateral.

The law will provide a framework within which movable property will be used as collateral or security for purposes of obtaining loans in order to allow more people to access bank loans at reasonable interest rates.

Assets to be considered include any type such as machinery, motor vehicles, livestock, and accounts receivable.

The practice was universal among developing economies, he added and countries such as Liberia, Ghana, Malawi, Kenya, Lesotho, Peru and Ukraine had experienced "substantive economic impact."

Economic analysts said the registry will bring benefit to the economy including participation of SMEs in the mainstream financial sector.
- dailynews

Tags: RBZ,