via Banks urged to be flexible | The Herald November 8, 2013 by Farirai Machivenyika
BIKITA West legislator Dr Munyaradzi Kereke has urged financial institutions to be flexible in extending loans to borrowers and not insist on collateral if poverty eradication is to succeed.
Dr Kereke said this while debating a motion moved by MDC-T legislator Thokozani Khupe calling on Government to establish a Women’s Bank.
“When you look at our country, the financial services sector is becoming a vehicle that has a negative effect to development,” he said.
“We need as a country to move our banking system from the issue of demanding collateral all the time. We need to look the basis of cashflow lending where we look at the viability of the project and then ringfence the loan.
“Our bankers must also stop being armchair bankers, but must go on the shop floor and supervise projects. If we are serious that is what we want to fight poverty.”
Dr Kereke said the demand for collateral by banks was not compatible with the fight against poverty as it assumed that borrowers had assets to secure the loans.
He said while calls for the establishement of a bank dedicated to empowering women were noble, it would face operational challenges if the illegal sanctions imposed on Zimbabwe were not removed.
“For as long as we want to start a bank and as long as that bank transacts in US dollars, it must first clear with New York and if you are trading in the Euro you must also clear with Europe. So, if that bank were to be in existence it would face technical rigidities caused by sanctions,” Dr Kereke said.
Zimbabwe’s banks usually insist on borrowers producing collateral before loans are availed to them.
This has caused lack of progress in several sectors, especially agriculture.
Farmers are failing to access the nearly US$1 billion that banks set aside for the agricultural season because they do not have collateral.
COMMENTS
If government wants the banks to lend (depositors) money without collateral then why does the government not give guarantees for these borrowers. Then the banks at least have only to decide if they can trust the government (the same guys that took other peoples money deposited with the banks)
Nearly all African leaders are well educated. Many left lectureships at universities to take up political leadership of their countries. Those that are not well educated have surrounded themselves with university graduate ministers. Even guerrilla movements are led by academics, best examples being Angola’s UNITA which was led by Dr Jonas Savimbi and the RCD of DR Congo led by Professor Wamba Dia Wamba. Those who mastermind the slaughter, torture, rape and genocide in African states were African academics and “intellectuals”. Secondly many of the African leaders have also chosen to injure and cause suffering to their subjects for the sake of creating and maintaining a special relationship with the rich in the West.