As a matter of law, the use of movable property as special security for the payment of a debt or generally the performance of an obligation is not new.
For example, the law recognizes that a pledge can constitute special security over movable property.
Equally, a notarial bond provides a means by which a debtor may hypothecate movable property without delivering it to the creditor in whose favour the bond is passed. Hire purchase agreements rest under similar principles.
It is therefore not disputed that the law can and should enable movable assets to be used as collateral to secure a loan agreement.
However, the legislative device that has been invoked through the expedient of the Bill in question is not without problems and the outcomes hoped to be achieved may not be realized if the Bill is enacted without amendment.
In a recent address to Parliament, Patrick Chinamasa, the Minister of Finance, said the Movable Property Security Interest Bill would make it much easier for those with movable assets, such as livestock to get bank loans.
This led to a flurry of newspaper headlines about how Zimbabwe plans to secure bank loans with cows.
This interpretation is accurate in view of the fact that clause 2 of the Bill defines “movable property” as “any tangible or intangible property other than immovable property”.
Livestock including cattle and goats would fall within the ambit of this definition.
The suggestion around references to livestock centres around the idea that farmers, especially rural farmers and beneficiaries of the land reform program in Zimbabwe will finally be able to obtain loans by using their livestock as collateral.
One of the leading explanations that is given for the lack of productivity on Zimbabwe’s farms is the lack of access to capital for farmers.
According to clause 4 of the Bill, a new department known as the Collateral Registry will be created by the new law.
Clause 5(1) of the Bill states that the purpose of the Registry is “to facilitate commerce, industry and other socio-economic activities by enabling individuals and businesses to utilise their movable property as collateral for credit”.
The difficulties that many a new farmer has experienced in raising capital are well documented.
However, if the government were genuine about empowering the rural farmer, it would start by giving the rural farmer or tiller of agricultural land security of tenure.
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