Of cattle, goats and the Movable Property Security Interests Bill

The ‘ease of doing business’ index is an index created by the World Bank Group and according to the Herald of the 15th of December 2015, the Bill was drafted by a World Bank consultant.

The World Bank Report on ‘Doing Business and the Global Secured Transactions and Collateral Registries Program’ revealed that the ‘Doing Business Project’ has influenced over 300 regulatory reforms around the world, by measuring and tracking changes in the regulations applying to domestic companies, including secured transactions.

The Doing Business Report 2012 revealed that between June 2010 and June 2011, 21 jurisdictions reformed their secured transaction laws.

The goal of the Secured Transactions and Collateral Registries Program is to increase access to credit for businesses, especially small to medium enterprises, by providing technical advice on implementing secured transactions laws and developing collateral registries to facilitate the use of movable assets as collateral.

Most Zimbabweans fail to access credit facilities from lenders due to lack of collateral in the form of immovable assets.

It is estimated that more than 80% of Zimbabweans are informally employed and do not have access to credit facilities.

The World Bank, being one of the advocates of the Movable Property Security Interests Bill, argues that small to medium enterprises play a pivotal role in economic development.

However, they are less likely to secure bank loans due to, inter alia, a weak regulatory framework, limited bank financing and few financing alternatives for start-ups.

The World Bank notes that about 50% of formal small to medium enterprises do not have access to formal credit facilities.

According to the argument, this calls for the introduction of innovative ways to unlock much needed capital.

The proposed Bill therefore, seeks to create an enabling environment whereby small to medium enterprises and the general public would be able to use their movable assets to secure loans.

Zambia and other jurisdictions in Africa and other parts of the world appear to have adopted this approach already and for the same reasons argued for by the World Bank.

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