The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday stated that given that the inherent risks in granting loans to Micro Small and Medium Enterprises (MSMEs) by banks is now reduced tremendously through the introduction of the National Collateral Registry (NCR), small businesses will now be able not only to access credit but also access such at reasonable rates.
This is coming as acting Chief Justice of Nigeria (CJN), Justice Tanko Muhammad, has assured that the judiciary will on its part continue to ensure that disputes arising from moveable assets lending are resolved speedily in line with constitutional provisions.
Emefiele assured that MSMEs in the country would be able to access credit at reasonable interest rates through the implementation of the NCR, which allows them to present moveable assets as collateral, for bank loans.
Emefiele spoke at the opening of the first national workshop for judicial officers on Secured Transactions in Moveable Assets Act (STMA) and National Collateral Registry with the theme: “Leveraging Moveable Assets for Credit Delivery in Nigeria: Legal and Regulatory Framework.”
He observed that small businesses had practically been denied access to credit as well as subjected to high interest charges by commercial banks largely as a result of their inability to provide acceptable collateral.
The governor, however, said given that the risks inherent in granting loans to MSMEs by banks had now been reduced tremendously through the introduction of the NCR, small businesses “will be able not only to access credit but also access credit at reasonable rates.”
The CBN is already moving towards the enforcement of the Secured Transactions in Moveable Assets Act (STMA) across all financial entities.
Highlighting some of the achievements of the NCR since its creation in 2015, Emefiele said as at January 31, 2019, 628 financial institutions comprising 21 deposit money banks, four merchant banks, one non-interest bank, four development finance institutions, 551 microfinance banks, 13 non-bank financial institutions, and 34 finance companies had been registered on the Registry’s portal.
He said lending banks had also registered interest on movable assets worth N1.23 trillion, $1.14 billion and €6.08 million through 41,408 financing statements.
He added that within about 18 months, over 41,000 moveable assets with values of over N1.4 trillion, including those in dollar and Euro denominations had been registered in registry.
“This underscores the potential of movable assets as collateral to enhance access to credit and, hence, our resolve to drive its effective implementation,” Emefiele added.
On the rationale for the NCR, Emefiele said: “You will all recall that one of the biggest problem that the MSMEs face in Nigeria given the fact that we recognise their contribution to economic growth and development in any economy- the biggest constraints they have often gone through is their inability to provide acceptable collateral for the loans they seek to obtain from the banks.
“Banks and financial institutions themselves have often used their inability of these MSMEs to provide collateral as the reasons why they cannot lend to them.
“So, at the CBN, we thought that we must break this jinx and so we said access to finance must be a thing of the past in Nigeria for small businesses.”
He said: “And that was how we thought about the fact that if you are a hairdresser and the equipment you have is your hairdressing equipment, if you are a tailor and what you have is a sewing machine, if you are a barber and the barber equipment is your machine; these are moveable assets which banks say they cannot accept as collateral.