Of cattle, goats and the Movable Property Security Interests Bill

As things stand, most of the farmers in possession of agricultural land hold such land on the strength of an offer letter – the clear terms of which are that the State can withdraw such land at any time and for any reason the State deems fit.

Most farmers would not have the financial muscle or wherewithal to challenge the withdrawal of their right to use the land.

They therefore are left fully exposed and have very weak property rights in respect of the land they utilise.

It is irrational to suggest that a farmer who tills agricultural land should be placed in a position where he or she gives up his or her livestock as collateral to obtain a loan for farming purposes in circumstances where the land can be withdrawn at any time by the government.

The farmer would be left completely exposed if he has used his livestock as security to obtain money to put a crop in the ground then the land is forcibly acquired for re-allocation as tends to happen.

Both the land and the livestock would be lost!

It would make more sense to use the land primarily as security. (At the very least, add movable property security interests legislation to a framework that has fully exhausted the potential for the full use of immovable property as security. Immovable land is better suited to this purpose as highlighted above.)

Such respect for property rights in the true and full sense would no doubt improve the ease of doing business in Zimbabwe.

It is always preferable to solve problems at their root than to proffer piecemeal solutions that only paper over the symptoms and ignore fundamentals that are in hopeless disarray.

For a process that is designed to cater to the needs of a low-income market, the process for registering a security interest in an item of movable property is extremely complicated and the legislation is not cast in a user friendly manner – as would have been expected for a market that is unlikely to have access to formal legal representation to assist in the securitisation process.

To illustrate the point, a “registered notice” is defined as “a notice of a security interest registered in the Registry, and includes an electronic communication to the Registry of information in an initial registered notice, an amendment notice or a cancellation notice.”

How is a rural farmer or the owner of a small business meant to interpret this definition?

After much convoluted language, clause 9 provides that a registered notice shall be deemed to be the definitive record of any record or obligation recorded therein – and presumably, on an application of clause 9(2), a certificate confirming the contents of a registered notice can be issued as proof of the contents of the registration notice.

Continued next page

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