Future of SA? Back to financial dark ages as Zimbabwe banks ordered to accept cows, goats as security

Zimbabwe banksZimbabwean citizens are not in control of their own money. There are government-imposed daily limits on how much cash can be drawn as funds run dry, with people obliged to queue daily to withdraw anything more than a sum sufficient to pay for a small bag of groceries. As a result, rents and other bills aren’t being paid, adding to the pressure on investors and business players in this imploding economy. The latest move by President Robert Mugabe to keep the economy ticking is to order banks to accept livestock as collateral against loans. White goods that lose value as soon as they leave the shop-floor are also on the list of items commercial banks will have to accept. What’s more, Big Brother will be keeping an eye on banking sector players to make sure they heed the instruction. Individuals and business operators will be able to register the assets they would like to use as security for credit at the Reserve Bank of Zimbabwe. This appears to be a move by the Zimbabwean government to pass the blame for citizens’ banking woes on bank operators. It puts individuals working within the sector in a tricky situation as it will become an offence to not heed legislation that seems designed to further damage already-fragile businesses. The Zimbabwean economy is collapsing after years of corruption and mismanagement and the conversion of a democracy to a one-party dictatorship and kleptocracy. This is the type of future that President Jacob Zuma and his friends are working towards, with his recent comments – from talk of land-grabs to criticisms of false claims of ‘white monopoly capital’ domination – indicating that he is a great fan of the Robert Mugabe way of running a country. – Jackie Cameron

By Desmond Kumbuka

Commercial banks in Zimbabwe will soon be compelled to accept livestock such as cattle, goats and sheep as collateral for cash loans to informal businesses under a new law presented to parliament Tuesday.

Under the Movable Property Security Interests Bill tabled for debate by Finance and Economic Development Minister Patrick Chinamasa in the House of Assembly, the Reserve Bank of Zimbabwe will compile and administer a collateral-security register in which small-business operators and individuals can register their movable assets as security for credit.

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 Chinamasa.

“As minister in charge of financial institutions, I feel there is need for a change of attitude by our banks to reflect of our economic realities,” he said. Banks are “stuck in the old ways of doing things and failing to respond to the needs of our highly informalized economy.”

Zimbabwe banks
Zimbabwean men attempt to get a malnourished cow on its feet in rural Masvingo, in this file picture taken January 21, 2016. Zimbabwean President Robert Mugabe has declared a state of disaster in most rural parts of the country severely hit by a drought. REUTERS/Philimon Bulawayo/Files

The southern African nation has mainly used the U.S. dollar since economic mismanagement and runaway inflation rendered its own currency worthless eight years ago. A liquidity squeeze ensued as growth faltered and a strong dollar eroded the competitiveness of Zimbabwe’s exports. The cash crunch has become so severe that banks are now limiting customer withdrawals.

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.

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