[Abuja]–Acting President Yemi Osinbajo on Tuesday signed new laws earlier passed by the National Assembly that would compel banks to accept movable assets as collateral with which to issue loans to Micro Small and Medium Enterprises as well as other Nigerians.
This is contained in a statement signed by Mr Laolu Akande, Senior Special Assistant to the President on Media & Publicity, Office of the Vice President.
The new law known as The Collateral Registry Act ensures that Micro, Small and Medium Enterprises (MSMEs) in Nigeria can register their movable assets such as motor vehicles, equipment and accounts receivable in the National Collateral Registry, and use same as collateral for accessing loans.
Also signed is the The Credit Reporting Act which provides for credit information sharing between Credit Bureaus and lenders (such as banks), as well as other institutions that provide services on credit such as telecommunication companies and retailers.
According to the statement, access to credit is critical to economic growth and is considered to be the motor for driving private sector development.
“However, in Nigeria more than 70% of private enterprises, typically MSMEs, have limited or no access to credit.
“Credit applications get rejected due to insufficient credit history and information for the lender to use to make a reasonable judgement, as well as unacceptable collateral. The two new Acts remove those obstacles for MSMEs.
“Traditionally, banks only give loans to businesses that can provide fixed land and property as collateral. This shuts out MSMEs which usually own only movable assets like motor vehicles and equipment.
“The Collateral Registry Bill, 2017, will give confidence to lenders to utilise the Registry and thereby make credit available to MSMEs and individuals through the use of their movable assets as collateral.
“The Credit Reporting Act now enables lenders to make reasonable judgement on whether or not to extend credit to an individual, and reduces the cases of bad loans,” the statement said.Please Follow Us @ThePageNg