THE Reserve Bank of Zimbabwe (RBZ) has introduced a collateral registry to facilitate registration of movable property security interests in a development expected to drive commerce, industry and other economic activities through enhanced access to credit.
RBZ Governor Dr John Mangudya said at the launch event on Friday that access to credit, especially by a small enterprises and individuals, was mainly hampered by lack of collateral acceptable to financial institutions.
“It is this bottleneck that a collateral registry is designed to eliminate and give fresh impetus to the economy,” Dr Mangudya said. The collateral registry is provided for in terms of Section 4 of the Movable Property Security Interest Act.
Operationalisation of the Act was waiting for the establishment of the collateral registry, established by the RBZ, which is now complete. The effective date is November 4, 2022, as proclaimed by President Mnangagwa.
“The registry system connects lenders to borrowers. It gives comfort to lenders and makes it easy to pledge their movable assets as collateral security,” Dr Mangudya said.
The kind of movable property security interest that can be registered in the collateral registry includes any security interest or asset that may be evidenced or created by means of chattel mortgage (property other than real property and includes animals, leases, money and gold coins).
This also entails notarial bond, note of hand, charge, secured debenture, pledge, trust receipts, financial lease and any other transaction that secures payment or performance obligation.
“The purpose of the collateral registry is to facilitate commerce, industry and other socio-economic activities by enabling individuals and businesses to utilise their movable property and assets as collateral for credit,” he said.
The functions of the collateral registry are to receive and store registered notices with respect to security interests, to amend or cancel the registered notices of collaterals, to make accessible to the public information in registered notices and to maintain a database of relevant information on debtors and secured creditors.
The central bank chief said the registry system was established using software bought from a Ghanaian firm Bysytems, which won the tender. The chief executive Thomas Akwaasi Baafi attended the lauch of the registry at RBZ on Friday.
“I, therefore, call upon financial institutions to take deliberate measures to assist small businesses to broaden their access to credit, increase effective usage of lending products and make finance affordable through use of movable property,” Dr Mangudya said.
“The launch of the registry today represents a significant milestone in the bank’s ongoing efforts to transform and modernise the financial sector infrastructure to position it to contribute to a sustainable and inclusive economic development and growth of our country.
“The collateral registry is therefore a game changer. A game changer that is going to revitalise micro, small and medium businesses in Zimbabwe. A game changer that is expected to assist micro, small and medium-sized enterprises, women, youths, rural communities and individuals who do not have access to traditional collateral such as land and buildings, to access loans and grow their businesses, enhance productivity, improve livelihoods and boost economic performance,” he said.
The registry was established with assistance from the Ministry of Finance and Economic Development, the World Bank, the banking sector and microfinance institutions. The central bank will embark on public awareness programmes across the country to conscientise the public.
Small and Medium Enterprises Association of Zimbabwe (SMEAZ) chief executive Farai Mutambanengwe welcomed the collateral registry saying it would improve access to credit by SMEAZ members and drive financial inclusion.
“Thank you very much for developing and launching this, we are very happy about the outcome.
“We hope that you will also raise awareness because this has been the major impediment when it comes to financial inclusion and specifically credit access for our micro, small and medium size enterprises,” he said.