Zimbabwe goes back to trade by barter; livestock now used as money and collateral for loans

This is a reinvention of trade by barter within the modern time.

The Zimbabwean government in April 2017 hinted that it is considering making livestock a legal tender.  This was due to mounting hyper-inflation and worsening economic conditions.

However, many private businesses and microfinance institutions have led the way in instituting this form of exchange in the country.

Lion Finance Zimbabwe and VIRL Rural and Social Finance Services now accept livestock as surety for loans given to young entrepreneurs and startups. Also, The Commercial Bank of Zimbabwe has also adopted the initiative.

Virgina Sibanda, the founder of VIRL Rural and Social Financial Services said the institution is comfortable with livestock as collateral for loans, especially cattle.

“We interrogate borrowers to gain a sense of their projected future earnings, and we want security cover at 1,5 times. We look at entrepreneurs and their ability to repay the loan,” Sibanda said.

“Our ceiling for loans is US$15 000 but we rarely grant an amount that high, unless the business owner is fully established. The average grant is US$500.”

She, however, noted that the final decision of issuance of loans is on the viability of the subject projects.

“Right now we take a photograph of the livestock record book and ask for confirmation from tribal elders to determine ownership of the cattle.”

In the Southern Africa countries, worsening economic situation has made many to consider livestock to be similar in value to assets such as houses in urban settings.

In Zimbabwe, there is currently a growing enthusiasm for acceptance of livestock for business transactions. This seems to be the only option for the country, and it has been noted as an African way of solving difficult problems.

According to local press in Zimbabwe, the country’s Minister of Primary and Secondary Education, Dr Lazarus Dokora had also said parents who cannot raise tuition fees for their children can offer their livestock as payment.

“On the issue of livestock, the community has to arrange a market where everyone participates; from the school authorities, local leadership and parents themselves to avoid parents being duped” concluded Dokora.


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