273,435 Businesses, Individuals Assess N1.8trn, $1.36bn Banks’ Loans – CBN
Collateral Registry to the rescue
CJN assures of speedy judicial process, secured transactions
BY COBHAM NSA, ABUJA – The Central Bank of Nigeria (CBN) is counting the good fortune that the nation’s banking sector has offered about ₦1.80 trillion, $1.36 billion and €10.92 million as loans to 273,435 beneficiaries through its National Collateral Registry (NCR) initiative.
The CBN said the statistics are based on a total of 113,153 financing statements registered on the NCR in respect of movable assets presented as collateral by individuals and business concerns.
Listed by the apex bank among potential benficiaries of these loan facilities are 262,904 individuals; 1,421 large; 4,260 medium; 1,433 micro; and 3,417 small businesses.
According to the CBN Governor, Mr Godwin Emefiele, as at September 30, 2020, a total of 694 financial institutions, consisting of 22 Deposit Money Banks (DMBs); four (4) Merchant Banks (MBs); five (5) Development Finance Institutions (DFIs); and 580 Microfinance Banks (MfBs) had registered on the NCR portal.
Others also on the portal include: 37 Non-Bank Financial Institutions; 43 Finance Companies; one Primary Mortgage Bank (PMB); and two Non-Interest Financial Institutions.
Mr Emefiele unveiled these figures at a virtual workshop with the theme: “The Role of the Judiciary in ensuring the effectiveness of the Secured Transactions in Movable Assets (STMA) and Credit Reporting Acts, 2017.”
He explained that the programme was hosted to sensitize Nigerian judges on concerted efforts by relevant authorities aimed at improving access to finance by entrepreneurs using movable assets as collateral for credit facilities.
”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 CBN governor said.
Emefiele said current events have highlighted the need to address identified challenges to optimal MSME contributions, including low access to capital and the gaps in both physical and financial infrastructure.
He said; “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.”
Noting that the programme also allows them to assess their ranking priority in potential claims against specified collateral, Emefiele said; “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.”
The CBN boss described some components of the foreign currency-denominated loans as representing the much-needed capital inflows into the economy, noting that the development demonstrate the Registry’s power as well as the STMA-centric reforms, to engender economic development in the polity.
Assuring of CBN’s resolve to sustain sectoral reforms and also improve public appreciation, particularly the judicial perception, of its potentials, Mr Emefiele said the position 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.
The governor, who assured Judges of CBN’s resolve continuously enhance the safety, soundness and resilience of Nigeria’s financial system, said; “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.”
Also speaking during the meeting, Chief Justice of Nigeria (CJN), Ibrahim Tanko Muhammad noted that most potential investors would hinge their decisions on coming to Nigeria on enforceability of their rights in any commercial venture.
In his presentation, Justice Muhammad said the judiciary has a crucial role to play in securing transactions in movable assets and credit reporting, adding that it is therefore imperative for the Courts to be versed with credit transactions principles, especially with the passage of the STMA Act and Credit Reporting Act, 2017.
On the need to strengthen the judiciary in protecting financial sector credit transactions, Justice Muhammad 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 CJN said; “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.”
Under the STMA Act, CBN had in 2017 unveiled the NCR with a mandate to receive, register, store and provide information about security interests in movable assets across the country.
