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Minister Patrick Chinamasa

Business Editor
THE Senate has said the crafting of the Movable Property Security Interests Bill, which went through second reading in the Upper House last week Tuesday, was a progressive way to empower ordinary Zimbabweans and broaden the economy.

Finance and Economic Development Minister Patrick Chinamasa presented the Bill, which provides a framework within which movable property may be used as collateral or security for purposes of obtaining loans upon reasonable terms from the financial services sector.

Contributing during the discussion, Manicaland Senator Mike Nyambuya said the Bill was a progressive way of broadening the production base of the country’s economy and its capacity to generate wealth and export products.

“We are mourning about the lack of capacity to produce and about the high cost of production because the majority of our people do not have access to capital. Up to now, the majority of the people who have had access to capital are those with title deeds because our financial institutions traditionally have always insisted on collateral security mostly in the form of immovable property,” he said.

Given that the Bill recognises livestock as collateral, Matabeleland South Senator Tambudzani Mohadi said the proposed legislation was a positive move for livestock-keeping communities in her province.

Sen Nyambuya added that the proposed legislation buttresses the country’s empowerment drive that favours a majority of previously marginalised citizens such as the youth, women and SMEs.

Senator Alma Mkhwebu said the use of movable property as collateral opens the window for rural entrepreneurs who have for a long time struggled to access funding like urban businesses.

“I support this Bill because a lot of people in the rural areas, people with livestock who are farmers can use what they have as security to access loans from the financial sectors so as to be able to source fertilisers,” she said.

Senator Monica Mutsvangwa concurred saying the Bill would assist women entrepreneurs who previously did not own properties. She said empowerment of many citizens would also enable Government to collect more revenue.

The Upper House also implored banks to adjust their operations and be willing to work with and support clients who have movable property as collateral in line with the proposed law.

Some members sought clarity on whether there was a ceiling on the money that one can borrow using movable property as security and the measures to be put in place to mitigate risks of non-performing loans.

Chief Senator Ngungumbane from Mberengwa described the Bill as a pro-poor legislation that will assist the less privileged in society, promote inclusivity and weed out loan sharks (omatshonisa) in the financial services sector.

Earlier Minister Chinamasa had said the Bill would support enterprise development and at the same time promote stability in the financial services sector.

He said the whole initiative entails the establishment of a Collateral Registry of movable property such as machinery, automobiles, inventory and account receivables.

“The registry will serve as a central source of information and will facilitate commerce, industry and other economic activities by enabling individuals and business to utilise their movable assets as collateral for credit, thereby injecting vitally important liquidity into their respective enterprises,” said the minister.

“The initiative promotes the availability of credit by significantly diminishing the risk assumed by lenders as they may bond movable assets as collateral and have immediately available recourse where a borrower defaults in loan repayment.”

Chinamasa said the operations of the Collateral Registry would be funded through levying of cost recovery fees and charges to be specified in the regulations. The fees may be charged for registration, amendment and cancellation of notices.

He added that the proposed Collateral Registry will bring substantial benefits to the economy including enhancement of the participation of MSMEs in the mainstream financial sector through the growth of secured lending in Zimbabwe.