Micro, Small, Medium and Large Scale Businesses, Individuals Borrowed N1.8trn, $1.36bn Under CBN’s Collateral Registry – Emefiele

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Individuals as well as Micro, Small, Medium and Large Scale Enterprises received loans totaling ₦1.80trn, $1.36bn and €10.92m under the Central Bank of Nigeria’s National Collateral Registry (NCR) established since 2015.

The CBN Governor, Godwin Emefiele, disclosed this on Tuesday at a virtual workshop held to sensitise Judges on efforts to improve access to finance by entrepreneurs using movable assets as collateral for credit.

Emefiele disclosed that 262,904 individuals accessed the collateral registry to obtain loans, in addition to 1,433 micro, 3,417 small, 4,260 medium and 1,421 large businesses.

He said, “Under financial infrastructure, the NCR has been operational since 2015 to allow financial institutions register their priority interest in movable assets obtained as collateral for loans.

“It also permits them to assess their ranking priority in potential claims against specified collateral. The effects of these are to improve access to finance by MSMEs by increasing their collateral options and providing a cushion of confidence for financial institutions accepting movable assets as collateral for lending.

“Based on a total of 113,153 financing statements registered on the Registry in respect of movable assets offered as collateral, lending banks availed credit amounting to ₦1.80trn, US$1.36bn and €10.92m to 273,435 borrowers, comprising: 262,904 individuals; 1,421 large, 4,260 medium, 1,433 micro and 3,417 small businesses.”

On the foreign currency-denominated loans, the CBN governor explained that they represent the much-needed capital inflows into the economy.

He gave the breakdown of the financial and non-financial institutions registered under the NCR portal as at September 30, 2020 to include: 22 Deposit Money Banks, 580 Microfinance Banks, four Merchant Banks, five Development Finance Institutions, 37 Non-Bank Financial Institutions, 43 Finance Companies, one Primary Mortgage Bank, and two Non-Interest Financial Institutions.

He added, ”As you may well know, the National Bureau of Statistics indicates that the over 41.5 million MSMEs remain central to the achievement of these macroeconomic objectives, as they sustain about 60 million people in employment and contribute 49.8 and 7.6 per cent of gross domestic product and export, respectively.

“Their innovativeness and high value creation capacity, clearly illustrated in the fast-developing fintech space, as well as their resilience as observable in their riding out the COVID-19 pandemic, summarize their importance to the economy.

“The foregoing highlights the expediency of addressing identified challenges to optimal MSME contributions, including low access to capital and the gaps in both physical and financial infrastructure.

“With regards to low access to capital, the Bank is currently implementing several low-interest, and tenor-friendly financing programmes for MSMEs across all the economic sectors (agriculture, industry, services and trade), with considerable impact on output and job creation.”

He emphasised the importance of the sensitisation of judicial officers, noting that the judicial officers are enablers in the implementation of both the Secured Transactions in Movable Assets (STMA) and Credit Reporting Acts (CRA), 2017, with a view to strengthening adjudication over them.

He told the judges that the apex bank would continue to ensure the safety, soundness and resilience of the financial system, adding that Nigerians are ultimate beneficiaries of all reforms initiated in the financial system.

According to him, “A lending relationship is based on trust and it is our belief that lenders will respond positively to the yearnings of MSMEs for greater access to finance, given the assurance that their legitimate interests will be protected under the enabling laws of the land.”

“To this end, it is pertinent that we solicit, and get, the full support of the judiciary and law enforcement agencies towards providing a robust and resilient financial infrastructure that will deepen credit delivery to our MSMEs,” he added.

In his remarks at the virtual workshop for judicial officers, the Chief Justice of Nigeria (CJN), Ibrahim Tanko Muhammad, stated that potential investors based their investment decisions in a country on the enforceability of their rights in any commercial venture.

This, according to him, has made it imperative for the Courts to be versed in credit transactions principles, especially with the passage of the STMA Act and Credit Reporting Act, 2017.

“There is need for the judiciary to be strengthened to help the financial sector protect credit transactions.

“The financial sector and indeed the entire economy stand to benefit from quick dispensation of justice in commercial or business transactions.

“As access to credit is necessary for the economic development of Nigeria, it behoves the judiciary to protect parties to a transaction and ensure fair and ethical standards.

“The purpose of both Laws is to facilitate and promote access to credit and enhance risk management in credit transactions,” the CJN said.

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