25 September 2017

Zimbabwe: Government-Owned POSB Open to Goat Use As Security for Loans

Photo: New Zimbabwe
Government-Owned Bank to Accept Goats As Security for Loans.

THE government-owned Post Office Savings Bank (POSB) says is ready to accept goats and other livestock as security for loans.

CEO Admore Khandlela was speaking at a Small to Media Enterprises Development Forum organised for local entrepreneurs by the bank in Harare on Thursday.

He said parliament is in the process of finalising the Movable Property Security Interests Bill to pave way for the introduction of the new bank lending model.

"When you look at it (Bill), it's actually simplifying the whole process of doing business. I know people joked so much about it before the Bill was actually being crafted but it's now out," said the POSB boss.

The use of cows, goats and sheep as collateral was first suggested by Finance Minister Patrick Chinamasa in parliament in April this year as part of efforts aimed at reviving the country's credit-starved economy.

Chinamasa told MPs that the assets would "include any property such as machinery, motor vehicles, livestock, and accounts receivable".

The proposal however, met with a lot of anxiety by locals who felt the country's governors were fast running out of ideas to manage a stubborn economy run down by poor policies and high-level corruption.

Zimbabwean banks are desperate to lure a largely unbanked Zimbabwean population into the formal banking system.

But they come unstuck when most of the money spinning business owners operating at small scale are still without immovable properties to register in order to access elusive bank credit.

In his remarks, Khandlela said his bank was amenable to the envisaged break from tradition.

"I don't know how many of us have seen it (Bill); that you can now use your goat, any of the movable assets.

"I know people literally even talked about goats. Yes, it was a joke but it's fact. If you have animals out there, it's happening in Australia by the way. In Ghana, in Kenya, those things are happening and they are working.

"Although some banks may resist because it's happening against traditional factors, some of us have had experiences; we won't bother much with that. We will actually move with it and time will actually catch up with it."

When the use of livestock comes into fruition, Khandlela said, banks would easily log onto a website that would indicate if a goat that has been pledged as collateral security by a client was not being used for the same purposes with different lenders.

He said the animals pledged would most probably have an electronic chip pinned on their bodies to allow lenders to track the assets.


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