Collateral registry to go live by year-end

GOVERNMENT has said the collateral registry system, aimed at facilitating national financial inclusion, is set to be operationalised before year end.

A collateral registry is a publicly available database of interests in or ownership of movable assets allowing borrowers to prove their creditworthiness and potential lenders to access their ranking priority in potential claims against particular collateral.

Movable collateral that can be used as security includes equipment, inventory, accounts receivable, farm products, household items and bank accounts.

“The Collateral Registry System is expected to go live before the end of 2021 and will be key in facilitating access to finance by targeted beneficiaries of the National Financial Inclusion Strategy, riding on the back of moveable assets as collateral,” Finance and Economic Development Minister Professor Mthuli Ncube, said in the 2022 National
Budget.

The collateral registry rides on the Credit Registry, which the Reserve Bank of Zimbabwe (RBZ) set up earlier, working with BSystems Limited of Ghana.

Minister Mthuli said the Credit Registry has facilitated the adoption of automated lending by lending institutions and integrated credit registry data into their credit approval processes resulting in increased utilisation from 824 592 as at 30 June 2020 to 1 317 853 cumulatively as at 30 June 2021, notwithstanding the lockdown restrictions.

According to RBZ, the setting up of the collateral registry is also expected to spur microcredit growth and enhance credit risk management in the microfinance sector.

According to the Zimbabwe Association of Microfinance Institutions (ZAMF), the credit only MFI portfolio as at December 31, 2020, had outstanding loans amounting to $1,2 billion compared with $651 million as at September 30, 2020.

The association noted that a large percentage of the portfolio was made up of consumption and business loans amounting to $464 million and $385 million, respectively.-The Herald