Zimbabweans has ventured into a new kind of banking ‘Cattle Banking’. Though, informal credit markets in livestock has existed in Africa, this is the first of its kind as part of the formal banking scheme. This new venture, started by TN Bank Zimbabwe Limited is expected to ease liquidity constraints for ordinary farmers who own cattle. It works similar to a traditional bank, only that cattle is used as a collateral and is kept with the creditor till further arrangements are worked out. The bank inspects the cattle, assesses their monetary worth and provides cash loans. In return to the cattle deposits, farmers collect a 10% interest a year on the value of the livestock which can later be paid either in cash or livestock. "Cattle banking is the only way owners can get monetary value for their animals without having to sell them," indicated the TN Bank executive. This scheme is also expected to safeguard assets, especially livestock from the extremely high inflation rate the country suffers from.
Though actual economic impacts of this new innovation are yet to be seen, it is a great step forward in alleviating a major constraint of the poor with respect to access to credit.
Source: AP
No comments:
Post a Comment