Central Bank Activates Loans Against Movable Collateral

Sep 27 , 2020

The country's chief regulatory bank has finally issued the directive that enables banks to take farm products, livestock, financial instruments, intellectual property, and forest and landholding certificates as collateral to approve loans. While approving the loans by taking movable assets as collateral, the financial institutions are required to take a tax identification number, national ID or passport from the borrowers, according to the directive, which became effective as of September 15, 2020. Plastic ear tags provided by the Ministry of Agriculture (MoA) will be used for the identification of livestock. The yellow ear tag includes the species of the livestock, the logo of the MoA, and the regional code number. It should also have a 10-digit unique national identification code that is printed in black on a yellow plate. Financial instruments, including bonds, shares, vouchers and warehouse receipts, can be used as a guarantee after getting registered under the movable collateral registry with their unique serial number. Intellectual property (IP) should also get a unique serial number issued by the Ethiopian Intellectual Property Office. The land use right certificate should also be registered under the movable collateral registry with the type of crop pledged, the expected maximum output, and the maximum production to be guaranteed for a loan out of the total output.