Mov­able as­sets loans on the cards

Lesotho Times - - Business - Bereng Mpaki

MOV­ABLE as­sets, in­clud­ing in­tan­gi­ble prop­erty, could soon be used as col­lat­eral for ob­tain­ing loans in a move that seeks to im­prove ac­cess to fi­nance for en­ter­prise de­vel­op­ment.

Ac­cord­ing to Pri­vate Sec­tor Com­pet­i­tive­ness and Eco­nomic Di­ver­si­fi­ca­tion Project (PSCEDP II) Project Man­ager, Chaba Mokuku, they were in­volved in the de­sign and de­ploy­ment of a modern mov­able col­lat­eral registry that would per­mit the re­li­able use of mov­able and in­tan­gi­ble as­sets as col­lat­eral.

The PSCEDP II seeks to fight per­va­sive poverty through the de­vel­op­ment of the pri­vate sec­tor to cre­ate jobs in Le­sotho. The World Bank-sup­ported project com­prises of three com­po­nents; im­prov­ing the busi­ness en­vi­ron­ment, sup­port­ing eco­nomic di­ver­si­fi­ca­tion and project im­ple­men­ta­tion sup­port.

Mr Mokuku said the re­form sought to ad­dress is­sues re­lat­ing to the cre­ation, reg- is­tra­tion and en­force­ment of se­cu­rity in­ter­ests over mov­able col­lat­eral.

“We are cur­rently as­sist­ing the Cen­tral Bank of Le­sotho in de­vel­op­ing a Se­cured Trans­ac­tion Law that would al­low for the regis­tra­tion and us­age of mov­able prop­erty as col­lat­eral,” he said.

“The mov­able as­sets will be reg­is­tered in what is called a col­lat­eral registry so they can be used as col­lat­eral de­pend­ing on their value.

“This is an im­por­tant tool that has the po­ten­tial to un­lock the chal­lenge of ac­cess to fi­nance es­pe­cially for up­com­ing en­trepreneurs.”

A se­cured trans­ac­tion is a loan or credit trans­ac­tion in which the len­der ac­quires a se­cu­rity in­ter­est in col­lat­eral owned by the bor­rower and is en­ti­tled to fore­close on or re­pos­sess the col­lat­eral in the event of the bor­rower’s de­fault.

He said the ini­tia­tive was meant to ben­e­fit re­cent grad­u­ates who may not have im­mov­able as­sets.

“Fi­nan­cial in­sti­tu­tions in the coun­try of- ten re­quire im­mov­able as­sets like houses and land as col­lat­eral needed for loan seek­ers to se­cure a loan,” said Mr Mokuku.

“But the re­al­ity is many peo­ple, es­pe­cially the younger pop­u­la­tion, do not nec­es­sar­ily have such im­mov­able as­sets. They may have smaller mov­able as­sets such as ve­hi­cles, com­put­ers or even in­tan­gi­ble as­sets such as busi­ness in­voices from their debtors. This will be use­ful es­pe­cially to young en­trepreneurs.”

He said the col­lat­eral registry would com­ple­ment fi­nance leas­ing re­form since the pro­posed registry would in­clude in­for­ma­tion on se­cu­rity in­ter­ests ac­quired through fi­nance leas­ing.

Fi­nan­cial leas­ing is an agree­ment wherein the lessor re­ceives lease pay­ments for the cov­er­ing of own­er­ship costs.

PSCEDP Man­ager Chaba Mokuku.

Newspapers in English

Newspapers from Lesotho

© PressReader. All rights reserved.