TN Bank, a Zimbabwean bank, has started a new program to help poor people with livestock assets but low financial resources get into their own home or start their own business without having to sell their cattle.
Zimbabwe is a nation that has suffered an economic crisis for decades. In a time where resources are scarce, TN Bank has turned to securing personal loans with client's cattle. The client receives an agreed payment depending on the health and weight of the cattle. They release the cattle to control of the bank to be fattened and bred after vet tests are done. The individual owners of the cattle accrue interest on the changing market value of their asset and have the option to repay the debt and get their cattle returned after an initial two-year period, or leave them with the bank for longer. The value of the cattle is likely to remain secure and be safe to lend against without dropping in value, as food shortages in Zimbabwe affect 13 million people and demand for meat is never-ending.
This is an excellent strategy to give much needed funds to Zimbabweans while at the same time also rewarding the bank that fronts the loan. Not only is this method of securely lending money excellent for Zimbabwe, it could be adapted to benefit farmers in America and the UK.
It can increase productive use of the cattle whose owners may not have the resources to breed and fatten them to the same extent the TN Bank-owned farms do.
The cattle may be slaughtered during the loan but debtors credited with other cattle of the same value in their place in the event they repay the loan. Provided the terms of the cattle loans are fair, I cannot see a negative aspect to this program. Zimbabwe's weak economy only stands to strengthen from it.
TN Bank is the owner of fast-food chains throughout Zimbabwe and can provide its own businesses with needed meat at the bank's own price rather than purchasing from other farms.
Charles Chakoma, an executive at TN Bank, said, "For many poor people a cattle bank account is the first bank account they have ever owned." While using cattle as a modern form of currency is a new concept in Zimbabwe, the animals have been an indicator of wealth for African tribes for many generations. It is customary for livestock to be used to barter with, as well as act as a marriage dowry.
During bad economic times in the U.S. and UK, and with talk of artificially created meat flooding the market, the value of authentic beef is sure to skyrocket. Banks of all nations would do well to follow Zimbabwe's footsteps and invest in a secure product while giving farmers with cash-flow difficulty an alternative solution to their problems. There is potentially billions of dollars in unrealized potential capital stored in livestock, without farmers needing to sell their assets worldwide.