Four months after the take-off of the National Collateral Registry (NCR), its impact on financing the small and medium enterprises (SMEs) sub-sector cannot yet be determined, says Mr. Eke Ubiji, Executive Secretary, National Association of Small and Medium Enterprises (NASME).
NCR is an initiative of the Central Bank of Nigeria (CBN), in collaboration with International Finance Corporation (IFC), designed to stimulate access to finance by Micro, Small and Medium Enterprises (MSMEs).
The Secured Transactions in Movable Assets Act 2017, also known as National Collateral Registry, was signed into law by then Acting President, Professor Yemi Osinbajo, on May 30, 2017, to allow financial institutions, bank and non-bank, to register their priority interest in movable assets as collateral for loans.
CBN Governor, Godwin Emefiele, recently noted that the introduction of NCR has started yielding positive results. According to him, the registry has attracted 16,236 financing statements of 20,684 movable assets valued at N392 billion on its platform as at August 24, 2017.
But speaking in an interview with Vanguard SMEs & Entrepreneurship, Ubiji, NASME scribe, said the real impact of the legislation on SMEs may not be known in the next six months, adding however that the expectation is that it would be helpful on the long run.
“At the moment, there is no information from our members on the impact of the new law on their businesses. It has just been signed and the effect may take some time to manifest. May be in the next six months we can begin to talk about the effect it has on our members’ ability to access finance. The law is however most desirable and we expect that, over time, it will have positive impact on the SME sector because, if well implemented, our members will begin to have access to loans even when they don’t have landed property,” he stated.
Emefiele, in NCR News Letter, stated: “There is empirical evidence, that the establishment of collateral registries has increased lending to MSMEs in other jurisdictions. In China, for example, the adoption of the collateral registry resulted in 84 percent of SMEs securing their loans using movable assets. The use of the registry in Mexico also grew loans secured with movables by 4 times while 45 percent of total loans went to the agricultural sector. Similarly, In Afghanistan, with the operations of the new centralised collateral registry, 90 percent of loans by financial institutions were granted to SMEs.
“I am hopeful that the commencement of operations of the NCR will have tremendous impact on MSME lending in Nigeria, as we strive to increase lending by banks to the sub-sector to about 10 percent from 0.067 percent in the next few years. I am happy to note that the strategy is yielding positive results. As at August 24, 2017, 136 financial institutions, 22 commercial banks, 106 microfinance banks, one non-bank financial institution, three merchant banks, three development finance institutions and one non-interest bank have registered 16,236 financing statements for 20,684 movable assets on the NCR platform, valued at N392 billion, particularly the micro enterprises, which are about 99 percent of the 37.1 million MSMEs in the country.”