John Shiklam in Kaduna
The Central Bank of Nigeria (CBN) says the National Collateral Registry (NCR) will boost small and medium scale businesses (MSMEs) and create employment opportunities for Nigerians.
Registrar of the NCR, Mr. Mainasara Muhammad, stated this at an interactive session with operators of small and medium scale businesses in Kaduna.
Muhammad explained that the NCR was recently established by the CBN with the support of International Finance Corporation (IFC) to help low income earners and small scale entrepreneurs to secure loans against movable assets.
He said the NCR is a web-based system that allows lenders to determine any prior security interests, as well as to register their security interests over movable assets provided as collateral by small business operators.
According to him, the registry facilitates the use of movable and personal assets as collateral for loans but the assets presented will remain in possession or control of the borrowers and thereby improves access to secured finance.
He said the registry was established to address the challenges of funding facing small businesses, especially the difficulties in securing loans from commercial banks.
Muhammad said the system will help bridge the MSME finance gap that has been estimated to about 62 billion dollars.
He noted that there are about 37 million MSMEs, many of who are struggling to gain access to the capital they need to grow because they lack collateral such as land and buildings that commercial banks usually request for.
“This collateral gap between the banks and MSMEs has led to a finance gap of about 62 billion dollars. Knowing that these MSMEs contribute significantly to economic growth and job creation in Nigeria, the NCR will help bridge the MSMEs finance gap by facilitating easier access to funding which will ultimately boost production and lead to creation of employment” he said.
Also speaking, Country Manager of IFC in Nigeria, Mr. Eme Essien Lore, said “the online registry coupled with the credit reporting system has been implemented in other countries like Ghana and Liberia with success recorded”.
Eme said Nigeria is the largest economy in Sub-Saharan Africa and a focus country for the Universal Financial Access by 2020 initiative.
“This is why we are supporting the CBN and other stakeholders in initiating the collateral registry as well as strengthening the Credit Reporting System.
“It has previously been implemented in other countries with amazing outcomes. For instance 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. We are very excited that a registry is now also in place in Nigeria”, he said.