National collateral registry to boost MSMEs lending by over N1.23tn

The Central Bank of Nigeria has said that the National Collateral Registry would boost lending by financial institutions to the Micro, Small and Medium Enterprises by over N1.23tn.

The CBN Governor, Mr Godwin Emefiele, said this on Monday in Abuja at the opening session of the First National Workshop for Justices and Judges on Secured Transactions in Movable Assets Act, 2017.

The workshop has as its theme “Leveraging Movable Assets for Credit Delivery in Nigeria: Legal and Regulatory Framework.”

Emefiele explained that Nigeria’s quest for inclusive economic growth and development would be futile if the country failed to adequately ease access to finance to MSMEs.

He said despite the fact that the MSME sector was vulnerable owing to various challenges, it remained the catalysts of economic growth in Nigeria.

The apex bank boss said a recent survey showed that over 17.5 million MSMEs operated in Nigeria, adding that the sector currently had an estimated financing gap in excess of N48tn.

He said that the Secured Transactions in Movable Assets Act, 2017 allowed borrowers to seek credit from any financial institution, leveraging assets like jewellery, farm products and vehicles as collateral.

Emefiele said the decision of the apex bank to push for the establishment of the act was to enhance financial inclusion by expanding the use of other assets aside land as collateral.

He said, “As at January 31, 2019, 628 financial institutions comprising of 21 Deposit Money Banks, four Merchant Banks, one Non-Interest Bank and four Development Finance Institutions have registered on the portal.

“Also, 551 Microfinance Banks, 13 Non-Bank Financial Institutions and 34 Finance Companies have registered their institutions on the portal.

“Lending institutions have registered interest on movable assets worth N1.23tn, $1.14bn and €6.08m using 41,408 financing statements by 163,042 borrowers.

“This underscores the potential of the use of movable assets and hence our resolve to drive its growth.”

Emefiele said the role of the judiciary was vital in making sure that the Secured Transactions in Movable Assets Act, 2017, was used to secure the investment made by financial institutions in the country.

He said, “Banking is a relationship based on trust and it is our belief that bankers will respond more positively to the financing yearnings of MSMEs given the assurances that their legitimate interests will be protected under the enabling laws of the land.

“The CBN is moving towards enforcement of the STMA Act across all financial entities.

“In this regard, it is pertinent that we solicit and get the full support of the judiciary and law enforcement agencies towards providing a robust and resilient financial infrastructure.

“This will deepen credit delivery to our productive sectors, especially among the MSMEs, and foster sustainable and inclusive growth.”

“We have commenced sensitisation of all stakeholders using a mix of all available medium and our objective is to ensure that the numerous benefits of the Registry are made known to all Nigerians.”

In his speech at the event, the acting Chief Justice of Nigeria, Justice Ibrahim Muhammad, told the gathering that the judiciary would effectively interpret and apply the Secured Transactions in Movable Assets Act, 2017, in their judgements.

He said, “The workshop is aimed at exploring effective means of accessing finance by the use of all forms of assets capable of being moved or transferred as collateral.

“Access to finance is very important in the growth and development of any economy and as such it’s important to expose judicial officers to the workings of the National Collateral Registry.

“This workshop will involve training and discussions around access to finance within the regulatory framework for secured transactions in movable assets.

“We will also be looking at how to resolve disputes that could arise through the use of the act.”

The National Collateral Registry was launched in May 2016, which led to the establishment of the Secured Transactions in Movable Assets Act, 2017.

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