EFFICACY OF COLLATERAL TYPES USED BY FINANCIAL INTERMEDIARIES IN KWAZULU-NATAL / DIE DOELMATIGHEID VAN TIPES KOLLATERAAL GEBRUIK DEUR FINANSIËLE TUSSENGANGERS IN KWAZULU-NATAL

Abstract

Collateral is an important incentive device used by lenders to encourage loan repayment. However, collateral must have secure and transferable title, it must be marketable, have low lender liquidation costs and lenders must be able to attach the collateral. Study results for rural and micro-enterprise finance institutions in KwaZulu-Natal showed that assets such as vehicles and equipment were not effective as collateral due to high costs in attaching the asset. Cessions on crops were often constrained by flaws in collection mechanisms. Secure and transferable property rights were important preconditions for land to have value as collateral. Collateral substitutes such as joint liability mechanisms were less effective when lending to large farmer groups (30–60 members) compared with small groups (4–6 individuals) of micro-entrepreneurs operating in urban areas.

Kollateraal is 'n belangrike insentiefinstrument wat deur krediteure gebruik word om terugbetaling van lenings aan te moedig. Kollateraal moet egter 'n veilige en oordraagbare eiendomsware hê, dit moet bemarkbaar wees, lae likwidasiekoste vir die krediteur hê en krediteure moet in staat wees om op kollateraal beslag te lê. Studieresultate vir landelike en mikro-onderneming finansiële instellings in KwaZulu-Natal het getoon dat bates soos voertuie en gereedskap weens die hoë koste aan inbeslagneming van die bate, nie effektiewe kollateraal was nie. Sessies op oeste is dikwels beperk deur swakhede in insamelings-meganismes. Veilige en oordraagbare besitreg is belangrike voorvereistes vir grond om waarde as kollateraal te hê. Kollaterale substitute soos gesamentlike aanspreklikheidsmeganismes was minder suksesvol waar daar aan groter boeregroepe (30–60 lede) geleen is as aan kleiner groepe (4–6 lede) mikro-ondernemers wat in stedelike gebiede opereer.