Obinna Chima

The Enabling Business Environment Secretariat (EBES) of the Presidential Enabling Business Environment Council (PEBEC) as well as operators in the credit bureau sub-sector have expressed optimism that the Nigerian economy would soon record growth in access to credit following the two Acts that were recently passed into law by the National Assembly.

The two Acts are the Credit Reporting Act 2017 and the Secured Transactions in Movable Assets Act (also known as the Collateral Registry Act) 2017.

The Reform Leader, EBES/ PEBEC, Mrs. Funmi Ilamahstated this at the fourth Credit Bureaus Association of Nigeria (CBN), National Reporting Conference held in Lagos yesterday, with the theme: “Credit Bureaus and the Nigerian Economic Recovery: Facilitating the Ease of Doing Business,” yesterday.

In July 2016, President Muhammadu Buhari established the PEBEC with the primary mandate of sustainably and progressively making Nigeria an easier place to do business. PEBEC is chaired by the Vice President, and comprises 10 ministers, the Head of Service and the CBN Governor, with representatives of the National Assembly, Lagos and Kano State Governments, and the private sector. The Enabling Business Environment Secretariat (EBES) supports PEBEC in implementing its reform mandate.

According to Ilamah, micro, small and medium scale enterprises (MSMEs) account for almost 50 per cent of the Nigerian Gross Domestic Product (GDP), as such, policies that support MSMEs would grow the economy.

She pointed out that access to credit was critical to economic growth and is considered to be the motor for driving private sector development. However, in Nigeria more than 70 per cent of private enterprises, typically MSMEs, have no access to credit or have very limited access.
“The Act strengthens the CBN Credit Bureau Guidelines. It delineates the roles, responsibilities and rights for credit bureaus, credit information providers and credit information users, as well as the rights of the credit data subject (ie the borrower).

“Another recent reform which supports the access to credit infrastructure is the Secured Transactions in Movable Assets (aka Collateral Registry) Act which was also signed into law by the acting President on 30th May 2017. This Act permits movable assets to be used as collateral. This especially favours MSMEs who tend not to have the traditional collateral of fixed or landed property. With this Act, entities can use equipment, vehicles, inventory, Accounts Receivable, and even farm products as collateral”, she explained.

According to her, the increase in confidence of lenders due to the above Acts would inevitably lead to a reduction in the risk premium charged on credit, especially to MSMEs, and thereby increase the availability of credit and ultimately reduce its cost.

On his part, the Managing Director/CEO CRC Credit Bureau, ‘Tunde Popoola, noted that the new Act would help strengthen Ease of Doing Business in the country, promote strong credit economy with all the benefits; encourage responsible lending and responsible borrowing; adding that it would make credit consumers and MSMEs obtain credit with ease, faster and less stringent terms and conditions.

“We now have the tools –the law and the credit bureaus – to ease access to credit; all stakeholders must work hard to experience the transformation they are capable of unleashing on the economy,” he added.