RBZ’s collateral registry system a huge success

Bulawayo Bureau

The Reserve Bank of Zimbabwe’s collateral registry system is fast gaining traction since inception in 2022 as it has recorded 377 active registered security interests with a total loan amount of $620,02 billion as at 24 July 2023, the Reserve Bank of Zimbabwe has said.

In a bid to promote access to credit, the bank launched an online collateral registry in terms of the Movable Property Security Interest regulations.

In his Mid-Term Monetary Policy Review on Wednesday last week, RBZ Governor Dr John Mangudya indicated that since November 2022, the date which the regulations were gazetted, 46 institutional users had been registered in the system.

The operationalisation of the collateral registry marks a critical milestone in access to credit and will facilitate borrowing opportunities for micro, small to medium enterprises.

The bank included a wide range of movable assets to be used as collateral including gold coins and livestock.

The Reserve Bank established a collateral registry for movable assets in order to expand the range of qualifying collateral accepted by lenders as part of the broader reforms to promote access to finance and enhance financial inclusion.

The development is set to benefit micro, small and medium enterprise (MSMEs) as well as the household sectors and ultimately boost production.

SMEs face difficulties in accessing funding as financial institutions demand collateral in the form of immovable property like houses. The banking sector has in the past been accused of imposing stringent conditions for businesses that need funding.

“Registered institutions include banks, microfinance institutions and law firms. The collateral registry recorded 377 active registered security interests with a total loan amount of $620,02 billion as at 24 July 2023,” said Dr Mangudya.

Dr Mangudya said the credit databases at the credit registry and the three private bureaux continue to offer reference points for lenders to check the credit worthiness of clients during origination and through the cycle of the loans.

The four credit reporting institutions in the country held 22, 96 million searchable records by the end of June.

In the credit registry the open loan records ammounted to 28,61 percent of the total loan records of 2,26 million by the end of June and closed loan records to the rest.

In the period under review, registered subscribers accessing the credit registry database were 243.

According to the report, gender distribution of loans is generally skewed towards male borrowers who constituted 68,01 percent while female borrowers constituted 31,99 percent of loan contracts in the Credit Registry.

As part of the communication strategy to promote awareness and ensure effective operationalisation of the collateral registry, the Reserve Bank has been conducting training and awareness workshops in Harare, Bulawayo, Gweru, Masvingo, Mutare and Beitbridge between April and July this year.

The workshops targeted banks, microfinance institutions, MSMEs and law firms.

The reserve bank plans to upscale its communication strategy to ensure awareness and full adoption of the registry across the country.

Last year, the Reserve Bank expanded the collateral registry in a development seen as a springboard to move from informal to formal financing.

It indicated that qualifying movable collateral varies from one lending institution to another, however, the generally acceptable movable property includes agricultural products such as livestock, poultry, crops, industrial and commercial equipment, durable consumer goods and household items, agricultural equipment, inventory and raw materials, gold coins, shares, patents, copyrights and trademarks.

According to the bank, individuals may apply for a loan as a group as may be specified by lending institutions.

They may use their assets that they own individually or jointly as collateral for a loan.

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