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  • 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”.

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