Collateral registry’ll boost MSMEs’ access to finance — Afrinvest

ANALYSTS at Afrinvest West African Limited
have asserted that effective implementation of
the Collateral Registry Act will boost access to
credit by Micro, Small and Medium Enterprises
(MSMEs).
Afrinvest is an independent firm active on
investment banking, securities trading, asset
management, and investment research with a
focus on West Africa, and a provider of research
content on the Nigerian market.
In a note to investors, the investment bankers
stated: “In our view, the Credit Reporting Act
would, to a large extent, improve credit
information database available to lenders and
could also make loan origination processes
more efficient by bridging the information
asymmetry gap between borrowers and lenders.
We believe successful implementation will go a
long way in improving access to credit.”
The Secure Transactions in Movable Asset Act
2017, otherwise known as Collateral Registry
Act, enables MSMEs to register their movable
assets such as motor vehicles, equipment and
accounts receivable in the National Collateral
Registry, which could then be used as collateral
for accessing loans from banks.
Afrinvest further noted that the Act also
complements the Collateral Registry Act as it
allows credit information to be shared between
lenders and credit bureaux in addition to other
establishments who offer similar credit services
such as fintechs, telecommunication companies
and retailers.
Credit bureaux gather information on the credit
ratings of individuals and make it accessible to
institutions who offer credit services for the
purpose of determining credit-worthiness of any
applicant for credit extension.
The analysts at Afrinvest commended the
commitment and vigour with which the ‘ease of
doing business’ objective is being pursued,
adding that if the current drive to implement
reforms is sustained, “we expect to see more of
the hurdles which constrain operating
performance of the private sector to be scaled.
Access to credit remains a major hindrance to
the development of the private sector in Nigeria
as most MSMEs either have insufficient credit
history for reasonable judgment or unacceptable
collateral to secure loans”.