Nigeria has recorded another landmark achievement in the World Bank and International Finance Corporation (IFC) scorecard on Ease of Doing Business with the establishment of National Collateral Registry initiated by Central Bank of Nigeria (CBN).
Twenty eight transactions worth N32 million took place on the platform, which became operational on 16th November 2016, according to Godwin Emefiele, CBN Governor who spoke at the public hearing on the bill for an Act to provide for secured transactions, registration and regulation of security interest in movable assets and for other related matters.
The bill seeks to encourage financial institutions operating in Nigeria to accept movable assets as security for loans granted to Medium and Small and Micro Enterprises (MSMEs) in Nigeria.
Emefiele who was represented by Johnson Akinkunmi, CBN’s acting Director Legal Service, expressed optimism that the passage of the bill will help to formalise over 37 million MSMEs across the country out of which only 2 million have so far been formalised.
The CBN Governor who stressed the need to tap resource locked up in assets, assured that the enactment of the legislative framework, will remove various impeding access to fund for MSMEs in Nigeria.
“Medium and Small Micro Enterprises is the bedrock of development, they employ the greatest number of employable citizens and most of the growth in the GDP is traceable to MSMEs. If you look at the value and the volume of the capital stock of most MSMEs in terms of the plants, equipment and machineries and their receivables, you will find out that it constitutes a very significant amount of all accounts but yet in modern finance, these assets do not qualify as collateral. They can’t be relied upon to obtain credit from the regular financial institutions. What we are doing is, how we can use these receivables and plants to at least obviate the problems and challenges posed by collateral security generally,” Emefiele said.
While applauding the initiative, Ubong Awah, Senior Financial Sector Specialist for World Bank Group Finance and Markets, disclosed that Nigeria moved up by 44 steps in the 2014 ranking sequel to the establishment of the Registry.
Awah who spoke with BusinessDay said: “in the Ease of Doing Business in 2014, in getting credit, we moved 44 spaces just because of the reform we did in 2016 that was acknowledged.
Awah expressed optimism that Nigeria will attract additional points when the World Bank comes back to Nigeria in May 2017 to conduct monetary evaluation on Ease of Doing Business in the country.
KEHINDE AKINTOLA
