Borrowers lose property as loans bite

A number of companies and individuals are losing their properties which are being auctioned at almost 20 percent of the market value as banks and local authorities have stepped up efforts to recover money they are owed.

The situation, analysts said, was a mirror of the liquidity crunch which has seen many people and companies failing to service their debts.

Newspapers are awash with adverts of banks and local authorities who have taken companies and individuals to court as a way of recovering their money.

The situation has created fissures between affected companies, the Affirmative Action Group, financial institutions, auctioneers and the Deputy Sherriff.

Last week police had to be called in Bulawayo after AAG tried to stop the auctioning of some properties in the city's industrial areas.

In an interview AAG national vice-president Mr Sam Ncube confirmed that property was sold cheaply although they tried in vain to stop the auction.

"We had blocked that auction but because of corruption that never happened. Property was sold for a song. Industrial property which costs $150 000 was sold for $20 000. Residential houses were also auctioned but it's illegal to sell residential property without a clearance letter from the Secretary of the Ministry of Housing (Local Government, Public Works and National Housing)," said Mr Ncube.

The auction came about after a number of financial institutions and the Bulawayo City Council won a High Court order to auction the properties to recover their money. Some of the banks include and Tetrad Investment Bank, NMB, African Banking Corporation of Zimbabwe, Standard Chartered Bank, CBZ, Agribank, POSB, ZB Bank and CABS.

According to one official who attended the auction, where police had to be called in for the auction to go ahead on 3 July, a number of properties were sold.

"It was quite a big auction because there was a combination of three institutions, the Sherriff of the High Court, Estate Agents and Small Enterprises Development Corporation (Sedco). Some of the few cases were withdrawn after the people involved made some special arrangements with their creditors," said an official who cited an example of Derby House, which belongs to businessman Mr Earnest Marima as one of the properties which were withdrawn from being auctioned.

The Sunday Business is reliably informed that a number of factories in Kelvin West including R n K Bakery's three properties were sold for a song.

"About 30 properties were put on auction and 25 were sold. The Small Enterprises Development Corporation (Sedco) had one property out of three sold and from the messenger of court there were about six properties sold," said the official.

There were also properties from outside Bulawayo that were sold and they included shops in Masvingo, Lower Gweru , Chiredzi, Gwanda and a farm in Gweru and another in Nyamandlovu.

Mr Ncube said his organisation was seeking audience with the Bankers Association of Zimbabwe (BAZ) to iron out such issues.

"What they are going is that they are killing our economy. Some of these people who are losing out properties would have paid most of the debt and probably left with interest that keep accruing. We are very concerned about this," said the AAG national vice-president.

Bulawayo Real Estate managing director Mr Michael Nekati said more people were losing property mostly to banks.

"People are borrowing money from banks and continue to default on the payment plan. The banks approach the courts to get a writ of execution against the collateral. The Deputy Sherriff then authorises to engage an auctioneer," said Mr Nekati.

He advised people who would have failed to settle their debts with banks to sell their property on their own to clear the loan instead of waiting for the property to be sold through auction.

"If someone realises that he or she can't pay back the loan they can sell their property on their own, they can realise more value than to wait until the property is attached and sold through auction," he said.

Mr Nekati lashed out at the AAG for using wrong channels to address the challenge.

"We have a problem with the AAG trying to disrupt our sales and sometimes blaming the auctioneer or sherrif who is acting on instructions from the court. It's not that we enjoy selling other people's property, but we will be carrying out the job as per the High Court instructions," said Mr Nekati.

"The money they would have been given by the banks is mostly depositors funds, so when the borrowers fail to pay the money, the bank has to attach the property in order to recover monies that were borrowed and which belongs to other indigenous companies or people. So we are carrying out the legal duty."

However, Mr Ncube said the auctioneers were also culprits in this issue.

"The Real Estate and these banks are birds of the same feather. They are benefiting from this bad act. They are part and parcel of this corruption," he said.

Mr Nekati said people should do due diligence before they rush to borrow money from the banks.

"People should do due diligence and assess the viability of the business that they want to do and not speculative business. People should be disciplined when they take loans. When they take loans, they do not use the money for the intended use. Some buy top of the range vehicles," he said.