RBZ establishes collateral registry

THE Reserve Bank of Zimbabwe (RBZ) is working with BSystems Limited of Ghana to operationalise the collateral registry system by year end, after the apex bank awarded the company the tender for the database.

A collateral registry is a publicly available database of interests in or ownership of movable assets allowing borrowers to prove their creditworthiness and potential lenders to access their ranking priority in potential claims against particular collateral.

Movable collateral that can be used as security includes equipment, inventory, accounts receivable, farm products, household items and bank accounts.

"With respect to operationalising the collateral registry, the bank has commenced working on the system prototype together with BSystems Limited of Ghana, following a successful tender process. The definition of business specifications which guides the vendor in the implementation process have been completed," RBZ Governor Dr John Mangudya said.

According to Dr Mangudya, the deployment of the collateral registry system was to complete during the first half of 2021 while full operations are expected to commence before the end of the year. The setting up of the collateral registry is also expected to spur micro-credit growth and enhance credit risk management in the micro-finance sector.

According to the Zimbabwe Association of Micro-finance Institutions (ZAMF), the credit for only MFI portfolio as at December 31, 2020,  had outstanding loans amounting to $1,2 billion compared with $651 million  as at September 30, 2020. The association noted that a large percentage of the portfolio was made up of consumption and business loans amounting to $464 million and $385 million respectively.

"The bulk of the consumption loans during the period are reflective of the family needs for basic requirements."

The deposit taking MFIs, who are members of ZAMFI, reported a total loan book of 155 million. According to Dr Mangudya, the enhanced credit referencing environment has improved credit risk management in the sector by providing timeous and reliable credit information.

"As a result, the Credit Registry recorded a significant increase in enquiries from 813,298 as at June 30, 2021 to 1,317,853 as at June 30, 2021," he said.

In the 2021 mid-term monetary policy statement, the Governor noted that the Credit Registry held over 1,45 million records, of which 524,342 were active loan accounts. He said individual records represented 98 percent of the active loan records in the Credit Registry and registered subscribers currently accessing the Registry were 209 as at 30 June 2021.

Meanwhile, total banking sector loans and advances increased by 73,27 percent from $82,41 billion as at December 31, 2020 to $142,79 billion as at June 30, 2021.