EXPECTATIONS are high from citizens intending to borrow money from the banks and other financial institutions under the Moveable Property Act number 3 of 2016.
Potential borrowers are expectant of the benefits of the Act which has broaden access to finance, as that has been one of the major hindrances to the growth the Small and Medium Enterprises (SMEs) in the country.
Most financial lenders have been demanding fixed assets or properties to secure loans prompting Government to come up with the law to compel financial institutions to accept moveable assets as collateral.
In view of the newly introduced Moveable Property Act, business players want the Patent and Company Registration Agency (PACRA) and the Bank of Zambia (BoZ) to accelerate the process of registration of movable assets for use as collateral.
Kitwe District Chamber of Commerce and Industry (KDCCI) board of trustees member Berry Mwango states that there is need to integrate and
interlink various processes on the financial platforms to grow the SME sector.
“On the financial sector, there is need to accelerate the process of registration of movable assets for use as collateral,” Mr Mwango said.
He says PACRA and the banking industry have not received this development with open hands looking at the slow pace at which it is being done.
Mr Mwango says there is need for the central bank and PACRA to iron out various issues hindering the full operationalisation of the platform.
He says that the Credit Reference Bureau (CRB) should be made more efficient and effective to benefit the citizenry.
“The CRB should be made more efficient and effective for the benefit of the citizenry. There is only bad publicity against it. A credit score should be introduce for those who score highly having higher chances of access to credit,” says Mr Mwango.
However, PACRA has acknowledged that more sensitization is needed to provide more information to SMEs, so that they are aware of the requirements as some of them are of the view that PACRA will be providing loans upon registering assets.
It is encouraging that PACRA set the ball rolling last year, by staging sensitisation workshops in different regions of the country.
Speaking during a workshop held at Sherbourne Guest Lodge in Kitwe to sensitize financial lending institutions on the benefits of the Act, PACRA assistant registrar commercial unit Christopher Mapani said the Act seeks to promote the use of Movable Property as collateral in financial transactions thereby easing access to credit particularly by the small and medium enterprises.
He reminded financial representatives and SMEs present at the Kitwe workshop that the law provides for the establishment of collateral registry for Movable Property housed at PACRA and other interventions aimed at giving lenders the assurance required to accept personal or Movable Property as collateral.
Mr Mapani adds that PACRA in collaboration with the BoZ is engaging financial institutions across the country through workshops to promote sensitization of the Act and ensure that the Act is fully implemented.
“We are here to educate people on the collateral registry. This is a registry that is being established under the Movable Property security interest Act which was enacted in April last year. The Act seeks to make movable properties attractive to lenders. This comes after some studies where done to see if the Act is workable,’’ Mr Mapani says.
He says this year sensitisation activities will be intensified to reach out to as many SMEs and financial institutions as possible.
“We will intensify awareness campaigns in 2018 so that businesses and financial institutions get to know the Act and its benefits to the economy and the growth of the SME sector, and we are working closely with the central bank,” Mr Mapani says.
Kitwe District Commissioner Binwell Mpundu observes that the law will make access to credit by SMEs easier.
Mr Mpundu says Government is aware of the many challenges SMEs face when accessing credit hence the enactment of the law.
BoZ Assistant director regulatory policy and licensing Joseph Mphande says the country has made significant headway in the development of the legal framework for the credit infrastructure.
Mr Mphande says few micro and medium enterprises have access to credit because most banks and financial institutions prefer to lend when security is provided in form of land or buildings.
Ndola District Chamber of Commerce and Industry (NDCCI) says members are expectant of acquiring loans using various moveable assets that include livestock.
NDCCI publicity secretary Paul Chisunka says there is need for banks to implement the Act as members were interested in acquiring loans using that method.
With knowledge about the new Act, more SME will have access to financial products to grow the sector while contributing effectively to the economy of the country looking at the numbers.