The Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC), a member of the World Bank Group, have said that the current difficulties being faced by Nigeria’s micro, small and medium enterprises (MSMEs) in accessing funds to develop their business will be greatly reduced by the strengthened credit reporting system and the launch of a National Collateral Registry (NCR) for moveable assets before the end of the year.
The assertion was made during the workshop for the Working Group of the Credit Reporting and National Collateral Registry Education and Awareness programme held on Tuesday, August 25, 2015 at the Lagos Branch of the CBN.
The workshop, held to update members of the working gr oup on the status and the mechanics of the credit reporting system and the collateral registry in Nigeria, also highlighted various ways all parties within the credit system – lenders and borrowers – could leverage the strengthened credit infrastructure in Nigeria.
Dr Okwu Nnanna, Deputy Governor, Financial System Stability (FSS) of the CBN described the collateral registry, the single central and electronically driven database where all moveable assets to be pledged as collateral for credit are registered in order to avoid the re-pledging of the same encumbered assets that have existing liens, as the missing link needed to connect the MSME sector in the country to financial sources.
According to Nnanna, who was represented by Udofia Obot, a Deputy Director in the Financial Policy and Regulation Department of CBN, “A collateral registry is needed to assist in converting moveable assets into effective and risk-free collateral for use to obtain loan from financial institutions in the country…making those assets useful by linking their owners to sources of financing for the growth of their businesses.”
He explained that the establishment of the collateral registry for moveable assets became imperative to curb the challenges being faced by MSMEs as a result of their lack of access to financing. These challenges, according to him, had manifested in the crippling of the sector’s growth, and led to loss of latent innovation, creativity and productivity.
He noted that the CBN, in addition to the creation of collateral registry of moveable assets, had taken various actions to further strengthen the lending environment in the country. These include the publication of the gazette of the Registration of Security Interests in Moveable Property by Banks and Other Financial Institutions in Nigeria (Regulations, No 1 of 2015).