- RBZ launches a Collateral Registry
- RBZ moves to increase access to finance and financial inclusion
- Gold coins to be used as collateral for loans
The Reserve Bank of Zimbabwe (RBZ) has introduced a Collateral Registry as it moves to enhance financial inclusion and increased access to finance through expanding the range of qualifying collateral accepted by lenders by including an additional set of movable assets. This comes after the central bank recently rolled out the second phase of the financial inclusion strategy running from 2022 through to 2026. The RBZ expects the development to benefit the financially neglected sectors of the economy such as the micro, small and medium enterprises (MSMEs) along with households, running under the theme, “borrowing made easy, lending made safer.”
A Collateral Registry in essence is a publicly available database of interests in or ownership of movable assets allowing borrowers to prove their creditworthiness to lenders through using these assets as security for the various loans that they may require. Although the movable securities vary from banking institution to the other, there are however generally acceptable forms which include, among others, the recently introduced gold coins, shares, agricultural products, minerals, durable consumer goods and household items.
There are several benefits that can the realized by the economy especially given the economic growth drive by the government to achieve an upper middle income economy status by 2030. The introduction of this development can result in reduced cost of borrowing in the long run through economic agents leveraging their movable assets to access credit for various productive activities in the economy. Given the long run relationship between financial market development and economic growth, the development therefore fosters growth through increasing the share of credit to the private sector and other sectors of the economy.
Further, the introduction of the Collateral Registry can lead to a shift in the structure of the economy from informalization to formalization and thus increase productivity and grow the revenue base for the authorities in the long run.