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Wendy Nyakurerwa-Matinde
THE Reserve Bank of Zimbabwe (RBZ) has registered remarkable progress towards ensuring universal access to funding for productive purposes through its financial inclusion strategies, a senior bank official has said.
This comes as the Government has prioritised inclusive economic growth that leaves “no one and no place behind” as enunciated under National Development Strategy (NDS1).
RBZ Deputy Governor, Dr Jesimen Chipika, said the credit environment was now geared towards leaving “no one behind and no place behind”.
She said through the apex bank’s collateral registry, loan applicants could now make use of their movable property, including livestock, household goods and
vehicles, among other things, to secure funding.
Dr Chipika, who was the keynote speaker at the Zimbabwe Association of Microfinance Institutions (ZAMF) CEOs Winter School, said this in an interview with The Manica Post on the sidelines of the event.
The theme of the event held at Nyanga Hotel was ‘Re-imaging the Microfinance Sector’. The CEO Winter School is a meeting point for all executives in the banking and microfinance sector.
The collateral registry is a publicly available database that allows borrowers to prove their creditworthiness.
As of 30 July 2023, there were 1 215 movable assets that were registered as collateral, including 175 pieces of agricultural equipment and a variety of livestock (15).
Dr Chipika said financial inclusion was key as it would assist in building macro, small and medium enterprises which are a large part of our economy since they contribute about 60 percent of the country’s Gross Domestic Product.
“We have changed the terrain for the better. Gone are the days when you were required to have some movable property as collateral when applying for loans. That requirement was limiting our potential as a country.
“The small and medium enterprises in our country are contributing significantly to our Gross Domestic Product.
“Some of the people running those ventures might not have immovable properties but they have household goods, livestock or even vehicles.
“Under our National Financial Inclusion Strategy 1 (NFIS1) which ran from 2016 to 2020, low-cost accounts, SMEs Desks, and Women’s Desks were introduced in the banks to reach out to ordinary people who were otherwise not comfortable coming into banks,” said Dr Chipika.
The second phase of the National Financial Inclusion Strategy, which is running from 2022 to 2026, is leveraging on the successes of NFSI1 and promoting sustainable livelihoods, poverty eradication, as well as creating wealth and employment in line with Vision 2030.
Dr Chipika went on to say demanding too much paperwork from clients is one of the factors driving people away from banks, hence the latest move to go easy on that, especially through digital platforms.
“At the end of 2020, about 83 percent of the country’s population had access to formal financial services, up from 69 percent in 2014. This also includes the rural population who are now easily accessible considering that every bank in Zimbabwe has digitalised.
“By 2020, 95 percent of SMEs had linked up with formal banking services, up from 18 percent in 2012,” said the RBZ Deputy Governor.
She said a part of the country’s population was excluded from formal financing, with women, the youths, the rural population where the majority are in smallholder farming, SMEs, people with disabilities, and pensioners failing to access funding due to lack of collateral.
“The Movable Property Security Interests Act was enacted to allow the financial sector to use movable assets as collateral. These assets include your television, stove, car, agricultural equipment and livestock, among other things.
“This is great because we have about 5,6 million cattle among ordinary Zimbabwe and all this is collateral was like dead capital, waiting to be slaughtered at funerals or weddings.
“Now through the Act, Zimbabweans can offer these assets. RBZ has a system in place where an asset pledged as collateral is registered so that it cannot be pledged to another financial institution.
“From November last year when the Collateral Registry was launched by the RBZ, household goods topped the list of pledged assets, followed by vehicles.
“For the rural population, livestock is now starting to feature and is being accepted by financial institutions,” said Dr Chipika.
“The financial sector is key and should not be delinked from development. Through the Government’s various initiatives, the sector is now linked to the development of the country, including the achievement of the 17 Sustainable Development Goals,” she said.
Speaking at the same event, ZAMFI board chairperson, Felix Muzvondiwa said the collateral registry is allowing people without immovable property to access funds to invest in their businesses.
“The public needs to know that they can actually register their cattle, goats and scotch carts, etcetera, and use them as collateral. The client keeps the collateral after registering it with the RBZ,” said Mr Muzondiwa.
He applauded this development, saying the microfinance sector needed to be more responsive and more relevant to the world’s economically active poor.
“The sector is a platform for delivering products and services to the world’s poorest and the marginalised,” said Mr Muzondiwa.
He said the country’s loan portfolio at risk is low at only 5 percent, with about 95 percent of all loans paid without any challenges.
“We need to remove the chimbadzo tag, where people charge ridiculous interest rates and employ all sorts of unorthodox means to force repayments. Loans need to be for the poor and affordable,” he said.
Online Reporter