Parliament passes bill broadening access to credit

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Parliament passes bill broadening access to credit

1:21 CAT | 16 Nov 2018

The Assembly of the Republic yesterday approved, in general, a bill establishing a legal regime for using movable assets as security to fulfil obligations, and which also creates a central registry of collateral security.

The approval of the law, according to the government, the proponent, increases the levels of access to credit by citizens, in addition to reducing the cost of personal credit.

“The system will require citizens’ redoubled seriousness and sense of loyalty, registering and giving as security assets that belong to him only, so as not to create risks to financing and economic losses to the creditor,” Frelimo deputy Patrício M’pangai said.

Approval of the law would open “a wide window on the constitution of real estate guarantees after registration, outside other existing models such as the constitution of a guarantor, via services or through a statement,” he added.

Recent statistics, M’pangai continued, showed that countries using similar systems had better access to credit, improved assessments of the stability of the financial system and low levels of default. “That is,in these countries there are in few unsound loans and a lower cost of credit, with great impact on productivity and economic growth.”

“The measure will broaden access to bank credit. A peasant who has a herd of oxen can access credit, taking the herd as a guarantee, “said MP. Jovial Cetina da Cruz, also of Frelimo.

Renamo deputy Ivan Mazanga called proposal bold and timely, noting that “a peasant who has a lot of land can resort to DUAT (land use rights) as security for financing. ”

For Silvério Ronguane of the MDM (Movimento Democrático de Moçambique, the chamber’s second-largest opposition party, said it was “a step that must be taken into account” despite having remained unimplemented for more than 40 years.

At present, securities are regulated under the Civil Code and other legal instruments and executions by the Civil Process Code. This reality “has proven to be outside modern and international practices and fails to respond to the needs of creditors, which makes it imperative to introduce more offers on assets and rights as collateral securities, with the aim of broadening access to credit for citizens”.

Source: Folha de Maputo