HomeBusinessAAG calls for moratorium as more lose assets over debts

AAG calls for moratorium as more lose assets over debts

The Affirmative Action Group (AAG) has called for a moratorium on the auctioning of individuals and companies’ assets over failure to service loans.

BY MTHANDAZO NYONI

AAG said individuals and companies were failing to service their loans due to the harsh economic environment.

Paul Mangwana  . . .  encourages people to pay their debts
Paul Mangwana . . . encourages people to pay their debts

A moratorium is an authorisation to a debtor permitting temporary suspension of payments.

“We have invited all the affected people to come through because we are trying to do a class action. We are saying there should be a moratorium or better payment plan rather than auctioning people’s property for a song,” said AAG vice-president Sam Ncube.

He said it was unconstitutional for people to lose their houses, adding the contractual agreement “should not make you lose accommodation”.

Ncube said the person who suffered was not the one with a debt, but the family. He said properties, especially in Bulawayo currently did not fetch any meaningful returns.

“It doesn’t work when property is sold for a song. For example, last week we had a bakery building which was sold for $40 000 yet the creditor was being owed about $300 000. In essence, the creditor couldn’t recover his debt [from the sale of the bakery] and so the debtor could not pay his debt,” Ncube said.

Ncube said if property was to be auctioned, it should be sold by estate agents and not auctioneers.

“This is because at the current system, the ones who are benefiting are the lawyers, auctioneers and the Deputy Sheriff. It doesn’t benefit the economy,” he said.

Ncube said some decades ago, auctioneers would sell your property and after paying the debt you remained with change to keep you going.

“But now they still sell your property for a song and fail to clear your debt. They will continue coming to you. This is satanic and evil. We can’t continue like that as a nation,” he said.

AAG has been calling for a moratorium on litigation against businesspeople battling to pay rentals and other utilities in the city of Bulawayo.

It argued that litigation had become big business which was negatively impacting on the city’s economy.

Default rates on loans and other payments have skyrocketed in the past due to economic hardships which have seen many succumbing to debt as they fail to manage their finances.

Service providers, including lawyers, suppliers of various goods, banks and especially micro-finance houses are now resorting to taking debtors to court to recover their money, giving brisk business to the Messenger of Court, the deputy sheriff’s departments, lawyers and auctioneers across the country who then dispose of the attached property for a fee.

Last week, the deputy sheriff of the High Court announced the sale of household property in Bulawayo belonging to businesspeople. The property included more than 30 residential houses and stands.

The sheriff also announced the sale of household property belonging to former Zimbabwe Broadcasting Corporation chief executive, Happison Muchechetere, after he failed to settle a $24 000 legal bill to a Harare law firm, Dube, Manikai and Hwacha.

The same sheriff announced the attachment and impending sale of property belonging to Zimbabwe Commercial Farmers’ Union president, Wonder Chabikwa, over an undisclosed debt owed to IETC Zimbabwe.

Former legislator and opposition politician, Job Sikhala is set to lose a commercial property in Chitungwiza after he failed to repay CBZ Bank an undisclosed sum of money while embattled businessman, Cecil Muderede, is set to lose a residential property in Harare’s Hogerty Hill over an undisclosed amount owed to Allied Insurance Company.

Legal practitioner Paul Mangwana said people should develop a culture of paying their debts. He said legal procedures should be followed to avoid any inconveniences. He said people tended to ignore the law and when the law took its course they cry foul.

Consumer Council of Zimbabwe executive director Rosemary Siyachitema, however, said consumers should approach their creditors and discuss the way forward.

“Firstly, consumers have to understand what they are signing,” she said.

“When you take a loan and realise that you are now struggling to pay, it’s better for you to approach that financial institution and negotiate a payment plan.”

According to economists, banks and micro-finance houses have lately been battling with loan defaults in the country. They said banks were charging high interest rates, making it difficult for people to repay the loans.

In 2010, President Robert Mu-gabe had to invoke the Presidential Powers (Temporary Measures) Act to protect assets of the Reserve Bank of Zimbabwe (RBZ) after creditors had obtained writs of execution to attach the bank’s assets over failure to settle debts. The debts were incurred after the bank engaged in activities normally done by the ministry of Finance. RBZ’s $1,35 billion debt has been taken over by government.

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