New Law Compels Zimbabwe Banks To Accept Cows And Goats As Collateral For Cash Loans


In an attempt to revive Zimbabwe’s credit-starved economy, Zimbabwe banks will soon be compelled to accept livestock such as cattle, goats, and sheep as collateral for cash loans.

Under a new law presented to parliament on Tuesday, borrowers would be allowed to register “movable” assets as collateral at a central bank registrar.

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Zimbabwe’s finance minister, Patrick Chinamasa, put forward the Movable Property Security Interests Bill for its second reading in parliament, buttressing that the aim is to compel commercial banks to accept the cows, goats, and sheep as security for credit.

Apart from livestock, vehicles, television sets, refrigerators, computers and other household appliances will become acceptable as collateral once they are evaluated and registered in the central bank’s register.

According to a 2015 data obtained by Zimbabwean statistics agency, over 92% of employed Zimbabweans work in the informal economy – including small hold farmers and tabletop sellers.

Chinamasa further told MPs that the reform also seeks to “promote financial inclusion to small and medium enterprises, women, youths and other under-banked groups and increase access to credit.”

The bill has several more stages to pass through but has received widespread support from the governing ZANU-PF coalition, which controls 160 of the 210 seats in parliament.

Cash-strapped Zimbabwe abolished its currency in 2009 following massive hyperinflation. Now the Mugabe-led country is experiencing a shortage of U.S dollars – which is the most popular of at least nine currencies that are in circulation.

In 2016, Robert Mugabe introduced bond notes, a parallel currency, in an attempt to restore liquidity but cash continues to flow out of the country because of the so-called “externalization”.

Zimbabwe Banks to accept cows as collateral

Currently, about $110m worth of bond notes are now in circulation but the South African country still relies heavily on imports. This trend subsequently affected bank lending badly that demand for loans outside the public sector has become increasingly sluggish.

Zimbabwe’s waning economy could also be traced to Mugabe’s policy of forcible land seizures from wealthy white farmers. The controversial policy widely damaged the agricultural sector as most of the beneficiaries of the program were government loyalists with little farming experience.

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Zimbabwe’s economy is forecast to shrink 2.5 percent this year, after contracting an estimated 0.3 percent last year, according to the International Monetary Fund.