Zimbabwe

Zimbabwe has recently enacted the Movable Property Security Interests Act 2017 (MPSI) to reform secured transactions law.

It legislates for the establishment of a Collateral Registry (s.4) whose purpose and function is to “facilitate commerce, industry, and other socio-economic activities by enabling individuals and businesses to utilise their movable property as collateral for credit” (s.5(1)). It was hailed as part of the efforts to make doing business in Zimbabwe easier.

One of the key difficulties in Zimbabwe, that the MPSI attempts to tackle, is the lack of access to credit from financial institutions faced by micro and small businesses. It is envisaged that the legislation will enable the use of livestock and furniture, among other classes of property, as collateral. It is perhaps no surprise at the very wide definition “moveable property” which is said to even include “assets that… are affixed to immoveable property” (s.2). Furthermore, it implements a wide definition of “security interest” as any property right in a moveable asset created “to secure payment or other performance of an obligation” regardless of the parties’ denomination of the right.

The creation and registration of security interests is set out in Schedule 1 to the Act, which stipulates a security agreement must, among other things, be in writing signed by the creditor and debtor (Schedule 1 para 2(4)).

Meanwhile issues of perfection and priorities are dealt with in Schedule 2. MPSI operates on a first registration priority rule, whereby priority between competing security interests is determined by the time of a registration notice in the Collateral Registry (Schedule 2 para 7(1)). The Act makes clear that a security interest can be perfected by “any formal or informal mode recognised by the common law” (s.3(4)), which would include for example by taking possession. However, where there is a dispute of priority between a registered security interest and an earlier perfected (but not registered) security interest the security interest perfected by registration has priority “regardless of the time of … [its] perfection” (Schedule 2 para 7(3)). There is an exception to this for possessory liens (such as the repairers lien) where the holder of the lien remains in possession of the goods (Schedule 2 para 14(3)).

There are provisions relating to security interests over future assets, proceeds of the secured asset, issues relating to rights of third parties and enforcement.

The legislation can be found here.

Other References:

http://www.herald.co.zw/zim-working-on-movable-property-security-interest-bill/

http://www.chronicle.co.zw/movable-property-to-be-collateral-says-president-livestock-cars-furniture-to-be-used-for-bank-loans-access/

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