Banks register N1.23tr movable assets for MSMEs’ funding

Economy

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Lending institutions, especially banks, have registered interest on movable assets valued at N1.23 trillion, $1.14 billion and €6.08 million through 41,408 financing institutions, the Central Bank of Nigeria (CBN) said yesterday in Abuja. Its Governor, Godwin Emefiele, said this has raised hope of easy access to finance by Micro Small and Medium Enterprises (MSMEs) in the country.  He spoke at the Workshop for Judges on the Secured Transaction in Movable Assets Act, at the National Judicial Institute (NJI). Emefiele said the interest which represents the value of the assets from MSMEs to secure loans from banks “underscores the potential of movable assets as collateral to enhance access to credit and, hence, our resolve to drive its effective implementation.” He said what this means is that any bank that wants to participate in the collateral registry, wants to take part in the use of these assets as collateral is at liberty to do so. So the value of those assets is N1.23 trillion that have been registered by the lending banks. These registered interests now forms the “pool of assets to guarantee loans by banks and facilitate easy access to financing at reasonable interest for MSMEs.” Speaking further, Emefiele said despite this impressive registered assets by banks, there is “an estimated financing gap in excess of N48 trillion for these enterprises and their significant share in our Gross Domestic Product (GDP). Poor funding directly translates to weaker economic performance”. Emefiele said: “Strongly related to this is lack of acceptable collateral and the inherent information asymmetries. MSMEs are typically deemed risk-laden, plagued with high mortality rate, and often lacking adequate collaterals acceptable for conventional credit. Accordingly, the estimated $158 billion or N48.3 trillion financing gap which characterises MSMEs in Nigeria reflects the risk-driven apathy of financial intermediaries to MSME lending.” He recalled that the National Collateral Registry was established in 2015.  “As at 31 January 2019, 628 financial institutions comprising 21 deposit money banks, four merchant banks, one non-interest bank, four development finance institutions, 551 microfinance banks, 13 non-bank financial institutions, and 34 finance companies have been registered on the Registry’s portal. Over 17.5 million MSMEs operate in Nigeria, accounting for a significant portion of our economy,” he said. In his address, the Acting Chief Justice of Nigeria (CJN) Justice Ibrahim Tanko Mohammed commended the CBN for recognising the role the judiciary plays in ensuring financial system stability in the economy. He said the judiciary on its part will continue to ensure that disputes arising from secured lending in moveable assets are resolved speedily in line with sacrosanct constitutional and statutory provisions. He said: “The passage into law of the Secured Transactions in Movable Assets Act 2017 has made it possible for inventories, equipment and other moveable assets to be used as collateral to access credit. “In an effort to protect the creditors, the Act provides for the establishment of a Collateral Registry. This registry, which is a financial infrastructure, stores information on security interests created over moveable assets and provides unrestricted access to persons or corporate bodies who may seek any information on the security interest.”

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