Zimbabwean Banks to accept livestock as collateral for loans

Patrick Chinamasa, the Finance and Economic Development Minister of Zimbabwe, has underlined the necessity for banks to respond to the needs of the country’s highly informalized economy.

According to the Minister,
banks in their current shape were “stuck in the old ways of doing things and failing to react to the immediate needs of our highly informalized economy.”

Mr Patrick earlier this week tabled a new bill before the Zimbabwean parliament, one that could compel commercial banks in the country to accept livestock as collateral for cash loans.

He said in a statement that; “As the minister in charge of all financial institutions, I feel there is the need for a change of attitude by our commercial banks to reflect our economic realities,” The minister said

Stated in the Zimbabwean Movable Property Security Interests bill, which is currently at the debate level in the House of Assembly, the Zimbabwe Reserve Bank will compile and also administer a collateral security register which will allow movable assets to be presented as a collateral security for credit facilities.

This bill is expected to cushion and provide relief for small-business operators and individuals who find it difficult to secure funds from banks due to lack of collateral.

Beside the use of livestock, computers, vehicles,  refrigerators, television sets,  and other household appliances will become acceptable as collateral after evaluation and registration in the the register of the central. the minister added.

The country abandoned their own Zimbabwean dollar due to economic mismanagement and hyperinflation which rendered their local currency worthless. Even with the new bond notes, there are issues with limited cash withdrawals.