The National Collateral Registry, NCR, has attracted 16,236 financing statements for 20,684 movable assets valued at N392 billion on its platform as at August 24, 2017.
Godwin Emefiele, Governor of Central Bank of Nigeria, CBN, who stated this in his forward to the NCR Newsletter posted on the bank’s website, weekend, said: “I am happy to note that the strategy is yielding positive results. As at August 24, 2017, 136 financial institutions, 22 commercial banks, 106 micro-finance banks, one non-bank financial institution, three merchant banks, three development finance institutions and one non-interest bank have registered 16,236 financing statements for 20,684 movable assets on the NCR platform valued at N392 billion.”
Emefiele said NCR would open a new vista of opportunities for Nigerian businesses, especially operators of the Micro, Small and Medium Enterprises, MSMEs, sub-sector as moveable assets can now be accepted as collaterals in obtaining ban credits.
The CBN boss said: “The registry allows financial institutions, bank and non-bank to register their priority interest in movable assets as collateral for loans.
“It is an on-line, real time notice based registry that allows borrowers to prove their credit worthiness and potential lenders to assess their ranking priority in potential claims against particular collaterals. There is empirical evidence, that the establishment of collateral registries has increased lending to MSMEs in other jurisdictions.
“In China, for example, the adoption of the collateral registry resulted in 84 per cent of SMEs securing their loans using movable assets. The use of the registry in Mexico also grew loans secured with movables by four times while 45 per cent of total loans went to the agricultural sector,” Emefiele pointed out.
He noted that the lack of access to credit for MSMEs in Nigeria had resulted in a huge financing gap, explaining “Records show that in 2016, loans to MSMEs by Deposit Money Banks as a percentage of their total loans and advances to the economy declined to 0.067% from 0.099% achieved the preceding year. There is no gainsaying, that the lack of access to finance has been one of the major impediments to the development of the sub-sector in Nigeria today.’’
According to him, “the NCR will unlock access to credit, which has always been a major concern to Nigerian MSMEs, particularly the micro enterprises, which are about 99% of the 37.1million MSMEs in the country, according to the National Bureau of Statistics (NBS).”
The NCR initiative, which is in collaboration with the International Finance Corporation, IFC, is one of the key strategies to significantly improve the credit culture in the Nigerian banking system, by designing and introducing a robust system that effectively reduces information asymmetry, assists lenders to make good credit decisions and ultimately improve access to credit by Micro Small and Medium Enterprises (MSMEs).
Financial institutions traditionally prefer fixed assets, such as land and building as collaterals for loans, while majority of the MSMEs can only provide movable assets such as inventory and equipment.
The Secured Transactions in Movable Assets Act, 2017, was signed into law by the then Acting President, Professor Yemi Osinbajo, on May 30, 2017.