Credit Reporting Law ‘ll Grow MSMEs – Saraki

President of the Senate, Bukola Saraki has said the new legislations – Secured Transactions in Movable Assets Act and the Credit Reporting Act will support the growth of Micro, Small and Medium sized Enterprises (MSMEs).

Both laws, passed by the National Assembly last June and signed into law by then Acting President Yemi Osinbajo, will increase bank lending while reducing bank exposure to loan defaults through pre-examination of credit worthiness for would be borrowers.

Under the law, potential borrowers can now register assets other than land and property as collateral to secure a loan, just as one can now register his/her automobile or other worthy assets. 

The new legislation, also known as the Collateral Registry Act, allows banks to increase lending to MSMEs, while not negatively impacting their balance sheets.

Noting the new laws afford Nigerians the opportunity to grow the economy through the MSMEs, Senator Saraki said, “this is a win-win situation for our economy and society”.

“The private sector, the Federal Government and the National Assembly worked together to create the enabling environment for MSMEs to grow, diversify the economy and increase employment.  

“We should all be proud of delivering a law that will allow many people to provide for their families and community”, the Senate president said.

“Combined, the new laws make good economic and business sense”, Senator Saraki said, adding that, “Already bank lending to MSMEs has increased and is expected to grow considerably for the remainder of the year and in 2018.”

He further noted that “in both developed and developing economies, small business’ growth is the engine of the economy and employment growth, stressing that, “With a high unemployment in Nigeria, the growth and support for MSMEs is critical.”

The Credit Reporting Act allows credit information sharing between credit bureau and those companies that lend money or extend credit for goods and services. Under the Act, companies will have access to the credit history to review whether there is a history of loan defaults or other financial blemishes.  

This extra layer of protection will serve to reduce lending risks, while preserving credit services to borrowers with good credit histories.

Regrettably, securing financing through loans has long been a problem for Nigerian entrepreneurs with most MSME owners having to rely on personal savings or loans from family and friends to launch their business ventures.