By abuwaz • 9th Feb 2019 • 140 views • 27 comments

The National Collateral Registry (NCR) office has outlined measures to increase lending by financial institutions to Medium, Small, and Micro Enterprises (MSMEs) to over N2 trillion in 2019. Mr Godwin Emefiele answering questions during his screening by the Senate for Central Bank Governorship in Abuja on WednesdayThese include 50 percent increase in utilisation of the NCR by financial institutions, and liaising with supervisory departments of the Central Bank of Nigeria (CBN) to ensure compliance with the Secured Transactions and Movable Assets Act, 2017. Nigeria has about 32 millions MSMEs which employ millions of Nigerians as well as contribute to the nation’s economic growth. But many of them find it difficult to survive or prosper due to lack of access to credit facilities from financial institutions. Financial institutions are mostly unwilling to lend to MSMEs because they don’t have properties like land and buildings which can be used as collateral for loans. ALSO READ: NDIC returns N7bn surplus to treasuryThis is confirmed by a survey conducted by a World Bank/Central bank of Nigeria team which shows that only 31 percent of MSMEs in Nigeria currently have a loan with a bank or a microfinance institution, and that personal savings and business income are the most important sources of capital for financing businesses. At the same time, 82 percent of financial institutions surveyed said that inadequate collateral is the most common challenge in granting loans. Minister of Industry, Trade and Investment, Okechukwu Enelamah Rationale for the NCR To address this challenge and deliver on its mandate on sustainable economic inclusive growth and financial inclusion, the Central Bank of Nigeria (CBN) in collaboration with the International Finance Corporation (IFC) established the National Collateral Registry (NCR).The establishment of the NCR follows the success recorded by similar initiatives around the world. According to the IFC, “Collateral registries are breaking down barriers to lending, especially for women and younger entrepreneurs who often do not have credit histories or banking relationships. Colombia’s collateral registry was launched in March 2014. Since then, it has received over 1.3 million registrations. “Also, about one-fourth of these registrations represent credit to micro, small, and medium enterprises—and there is clear potential to increase the numbers. More than 100 financial institutions, including some of the largest banks in the country, are already participating in the registry as lenders.”The IC noted further: “Mexico has implemented an electronic movable-collateral registry—with 97 percent of the registrations supporting loans to small and medium enterprises. In May 2015, a new secured-transactions system came into effect in Costa Rica. In the year that followed, there were about 9,500 new registrations. More than 4,500 small and medium enterprises received loans secured by movable assets. The World Bank also noted that in Ghana, the collateral registry has facilitated $1.3 billion in financing for the small-scale business sector since it was established in 2010, and $12 billion in total financing for the business sector using movable assets as collateral.

Umaru Dikko Radda NCR Mandate Launched in May 2016, the NCR is a financial infrastructure that seeks to deepen credit delivery to Micro Small and Medium Enterprises (MSMEs) through enhanced acceptability of movable assets (equipment, machinery, vehicles, tricycle, crops, livestock, account receivables, inventories, jewelries etc.) as collateral for loans by financial institutions. It is a noticed based Registry where security interests in moveable assets are registered after being used as collateral to obtain facilities from financial institutions. It allows lenders to assess their priority interest in potential claims against particular collateral.The objectives of the Secured Transactions & National Collateral Registry (ST/NCR) is to enhance financial inclusion in Nigeria, stimulate responsible lending to MSMEs, facilitate access to credit secured with movable assets, perfect security interests in movable assets, facilitate realisation of security interests in movable assets, and to establish a Collateral registry and provide for its operations. The key deliverable of the Registry is to promote the acceptance of movable asset as collaterals for loans and contribute to economic growth and development of the country. ALSO READ: Credit guaranty scheme underway for DBN institutions Progress report A recent report by the CBN shows that the NCR like similar initiatives around the world is living up to expectations in facilitating lending to MSMEs.The report showed that the number of MSMEs that have used their movable assets to obtain loans from financial institutions through the NCR rose from 100,049 in the first year, 2017, to 154,827 as at December 19, 2018, indicating increase of 54 percent. The report also showed that 22,251 of the MSMEs were female entrepreneurs. Further breakdown showed that 146,777 of the borrowers were individuals, 3,416 were micro businesses, 2,169 were medium businesses, 1,777 were small businesses and 687 were large businesses.The number of movable assets used by the MSMEs to obtain loans rose to 57,639 as at December 19, from 26,471 in 2017, representing increase of 28,302 or 118 percent Top on the list of the movable assets are: Documents of title / Negotiable Instruments (17105); Motor vehicles (11, 725); Consumer / Household goods (9,029); All assets (6,427); Electronics namely Television, Refrigerator, Projector (3,5740); Other intangibles (2,573); Inventory (2,531); Farm products (1,580); Deposit Accounts (1,141); and Equipment (537).

Source: Vanguard News

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