ZIMBABWE is working on Movable Property Security Interest Bill that will facilitate increased access of credit to micro, small and medium enterprises as well as communal farmers. According to the draft Bill, the objective of the proposed law is to “facilitate commerce, industry and other socio-economic activities by enabling individuals and businesses to utilise their movable property as collateral for credit, to establish the collateral registry (and) to publicise the potential existence of interests in the collateral.”
The Bill will see the creation of collateral registry system to avoid borrowers using collateral already registered with other financial institutions.
Last week, Reserve Bank of Zimbabwe director (bank supervision) Mr Norman Mataruka wrote to chief executives and managing directors of banks, requesting the contribution of the draft Bill.
The Bill was drafted by a World Bank consultant.
The small to medium and enterprises and the informal sector is thriving in Zimbabwe.
With over 70 percent of the population living in the rural areas and the bulk of the urban population operating in the informal sector it is clear that the informal sector has become the biggest employer in the country.
However, lack of immovable property has been restricting micro and small business to access credit from financial institutions.
“The Bill will also promote inclusive banking,” said an economist with a local bank.
“You will probably see a situation where rural farmers use their livestock wealth as collateral.”
Last week, Zambian Commerce, Trade and Industry Minister Margaret Mwanakatwe presented a similar Bill to her Parliament with the view of providing for the utilisation of movable assets as collateral.
She said the Movable Property Security Interest Bill provides for the creation of security interests in movable property to contribute to economic development. The Bill would also harmonise secured transaction laws.
This was after Zambia cabinet approved the introduction of the movable property security Bill in Parliament to provide for the utilisation of movable assets as collateral in September this year.