’Marafaele Mohloboli

THE Senate recently adopted a report on the Security Interest in Immovable Property Bill presented by its legislation committee. This means that the upper house of parliament will now debate before possibly approving the bill aimed at allowing people and businesses especially small micro and medium enterprises (SMMEs) to use their immovable property as collateral when applying for bank loans.

According to the chairperson of the Senate’s legislation committee, Chief Ramoqai Lesaoana Peete, the bill will also enable all those who are not formally employed and do not have pay slips to use their immovable property to secure loans from banks.

“The bill proposes the establishment of a collateral registry for the purposes of publicising existing security interest and liens in immovable property and perfecting security interests in collateral against third parties,” the senate’s legislation committee states in its report. A lien is a right to hold onto property belonging to another person until a debt owed by that person is paid up.

“The introduction of the bill will also make it easier for borrowers and lenders to use personal property as collateral and thus increase their level of creditworthiness. It will also enable borrowers to pledge their rights in personal property as security for loans more easily and less expensively. Ultimately, the bill will result in improving access to credit, particularly for small micro and medium enterprises.”

The bill grants the Central Bank of Lesotho (CBL) the powers to appoint a Registrar of Security Interests whose job shall be to register immovable property, maintain the collateral registry system and settle issues arising out of the registration of the immovable property.

“The role of the registrar shall be to secure the moveable property and make it have value before the law thus making it easier to get credit. This means that a person who registered immovable property will have a right to secure an existing or future debt. Thus, once an individual has been granted a loan, no one else can do anything on the property as long as it is still registered as collateral in the registry,” the committee states in its report.