Banks Provide Over N1.8trn Loans To 273,435 Businesses Through Collateral Registry-CBN 

Through the Collateral Registry initiative of the Central Bank of Nigeria, the banking sector has provided about ₦1.80trn, $1.36bn and €10.92m as loans to 273,435 borrowers.

The loans were given to 262,904 individuals; 1,421 large, 4,260 medium, 1,433 micro and 3,417 small businesses.

The CBN Governor, Mr Godwin Emefiele gave the figures at a virtual workshop themed, “The Role of the Judiciary in ensuring the effectiveness of the Secured Transactions in Movable Assets and Credit Reporting Acts, 2017.”

The workshop was held to sensitize Judges on concerted efforts to improve access to finance by entrepreneurs using movable assets as collateral for credit.

The apex bank had in 2017, under the Secured Transactions in Movable Assets Act unveiled the National Collateral Registry with a mandate to receive, register, store and provide information about security interests in movable assets.

Emefiele said as of September 30 this year, a total of 694 financial institutions comprising 22 Deposit Money Banks, four Merchant Banks, five Development Finance Institutions, 580 Microfinance Banks, 37 Non-Bank Financial Institutions, 43 Finance Companies, one Primary Mortgage Bank and two Non-Interest Financial Institutions, had registered on the NCR portal.

He said, ” 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.

“As I have earlier stated, 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$1.36bb 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.”

Emefiele said some components of the foreign currency-denominated loans represent the much-needed capital inflows into the economy, adding that this attests to the power of the Registry and, indeed, the STMA-centric reforms, to engender economic development.

Ultimately, he also said it underlines the CBN’s resolve to sustain the reforms and improve public appreciation, and especially judicial perception, of its potentials.

This, he noted, invariably, informs the need to sensitize judicial officers, as enablers in the implementation of both the STMA and CRA, 2017, with a view to strengthening adjudication over them.

“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.

Emefiele assured the Judges that the management of the CBN would continue to enhance the safety, soundness and resilience of the financial system.

“Expect us to call on you more often as we continue stakeholder engagements leveraging all available media.

“The benefits of all reforms initiated in the financial system must be enjoyed by all Nigerians,” he added.

The Chief Justice of Nigeria, Ibrahim Tanko Muhammad  said that potential investors often hinge their decisions to come to Nigeria on enforceability of their rights in any commercial venture.

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

He said there is need for the judiciary to be strengthened to help the financial sector protect credit transactions.

He said, “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 protection of the rights of parties in a credit transaction would promote responsibility in the market and encourage responsible borrowing.”

The CJN said the judiciary has a crucial role to play in securing transactions in movable assets and credit reporting.