MSME financing: National Collateral Registry to the rescue

The Central Bank of Ni­geria (CBN) has said the National Collateral Reg­istry, which it recently devel­oped with the support of Inter­national Finance Corporation (IFC), a member of the World Bank Group, to allow low-in­come earners and small-scale entrepreneurs to secure loans against movable assets, will not only increase local production but will help in reducing unem­ployment.

Speaking at the Kaduna In­teractive Forum on the Nation­al Collateral Registry and Credit Reporting System, the Registrar, of the National Collateral Reg­istry (NCR), Mr. Mainasara Muhammad said the Collater­al Registry will help bridge the micro, small and medium enter­prises (MSME) finance gap that has been estimated to about 62 billion dollars.

In his words: “There are about 37 million micro, small, and medium-size enterprises (MSMEs), many of whom are struggling to gain access to the capital they need to grow be­cause they lack collateral such as land and buildings that bank usually request for.

“This collateral gap between the bank 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, as such, the Nation­al Collateral Registry will help bridge the MSMEs finance gap by facilitating easier access to funding which will ultimate­ly boost production and lead to creation of employment.”

IFC Country Manager for Nigeria, Eme Essien Lore, in his speech said: “The online registry coupled with the credit reporting system has been implemented in other countries like Ghana and Liberia with successes recorded.”

According to Eme, 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 Central Bank of Nigeria and other stakeholders in initi­ating the Collateral Registry as well as strengthening the Credit Reporting System,” he said, add­ing, “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”.

The National Collateral Registry is supported with the strengthened Credit Report­ing System to promote secured transaction and responsible lending framework in Nigeria.

These two financial infra­structures are expected to en­able businesses to leverage their assets to obtain credit for growth, improve assets liquidity, espe­cially short-term assets, and al­low asset diversification as well as reduce cost and promote pru­dent lending.