Disaster for lenders

HARARE - The Zimbabwe government is pushing for a suspension on the seizure of mortgaged property, a move that might hugely affect lending businesses, analysts have said.

Government last week moved a motion at a meeting to freeze acquisition of property, at a time when Zimbabweans are failing to meet their loan obligations.

Economist John Robertson said a move like that would blow anyone’s chances of owning a house as businesses will stop issuing loans.

“That will be doing terrible damage to a system that has been working well for many years,” Robertson said.

“The immediate effect is that nobody will issue any new loans and many people will suffer.”

He gave an example of how Native Purchase Area farms were destroyed when farmers stopped meeting their bank loans obligations after seeking protection from Zanu PF.

He said after that, banks refused to give farmers loans, resulting in low production.

“This development will not only destroy chances of borrowing money, but result in the destruction of the building industries, there will be no jobs in factories, the list goes on and on,” Robertson said.

Property analyst Mernad Chekai said such a scenario could result in a depreciation of loans.

“The obvious reaction is absence of lending as the only viable collateral is property,” he said.

“We expect to fall very far behind because there won’t be any viable collateral.

“If someone cannot attach property, then that means no one wants to take risks. We expect a contraction of property value, even banks will make losses as the point of recovery will be low,” he said.

This comes as businessman and loan shark Frank Buyanga was this year blocked from auctioning property of a debtor.

Labour minister Nicholas Goche,  who sits in Cabinet, was once sued by Zimcor Trustees Limited, owned by Buyanga, over an unpaid loan of $70 000.

Comments (5)

Why would you go to money lenders using a mortgaged property. You can still access loans on property with no mortgage. It si like using your company car as coleteral who can accept that. A mortgaged property is not yours until you have paid off the mortgage.

Maita Manyuka - 16 December 2013

Maita u getting it wrong as the reporter is saying u will have mortgaged the property by offering it as security to the money lender.

fundi - 16 December 2013

THE PROBLEM WITH ZIMBABWEANS IS THAT WE BORROW WITHOUT THE INTENTION OF PAYING BACK.HOW MANY YOUTHS HAVE PAID BACK THOSE INDEGINISATION LOANS.THATS THE REASON WHY FARMERS DO NOT WANT TO USE LAND AS COLLATERAL.THEY KNOW THEY ARE NOT WILLING TO PAY.

DHEWA - 17 December 2013

Remember most of these Ministers and legislators are heavily in debt. They ganged-up against Buyanga when they failed to repay loans, they caused Zesa to wipe off their electricity bills and forced local authorities to do the same on rentals. The move has everything to do with shielding these Zanu PF people from honoring their loan obligations

Sachin - 17 December 2013

If you are in business, you are not a Zanu PF zealot but operating in its mismanaged economy, then you would know that after the elections business has been divided by 10 and you cannot then meet any loan repayments. If you are not a businessman, then you are lucky to be employed; work well.

Mandebvu - 17 December 2013

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