This state of affairs will be compounded by the weak bargaining power a small business or individual farmer will have in the contract-making process.
More protection is required to secure the position of a small-time borrower.
In conclusion, celebration around the measures sought to be introduced must be accompanied with caution as it will not just be a case of owning a car or cows and consequently being entitled to bank loans.
Despite what has been reported in the media, the Bill does not compel any banking institution, micro-financier or other lender to accept movable assets as collateral – such a provision would be unconstitutional in any event.
The decision as to whether to accept movable assets as collateral will remain with the bank or lender concerned pursuant to a full risk assessment and depending on the availability of funds for this purpose.
All the law can do is create a framework that encourages the acceptance of movable property as security, primarily through enabling the registration of the secured interest.
Additionally, the law places a borrower in a very weak position – which could lead to more loss than gain.
While reform in the law is a good thing, there can be no substitute for reforms that deal with the fundamental problems as opposed to reforms that paper over the cracks.
At the heart of any recovery process in Zimbabwe lies the need to address the big elephant in the room which is the need for more secure protection for property rights.
Without reform in this area, we will continue to reel under superficial high sounding policies that ultimately do not lead to a sustainable change in the country’s fortunes – no matter how well-intended.
By Advocate Fadzayi Mahere. This article was reproduced from The Source.
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