On 30th May, 2017, the Acting President of Nigeria and current Vice President, Professor Yemi Osinbajo assented to the Bill on Secured Transactions in Movable Assets (Collateral Registry Act). The Act validates the previously issued guidelines by the Central Bank of Nigeria (CBN) on the establishment of the Collateral Registry prior to legislation.
In 2016, the World Bank estimated that there were 37 million micro, small, and medium-size enterprises (MSMEs). Accessing loans has been listed as a major recurring obstacle to business growth and continuity owing to lack of traditional collateral such as land and buildings.
The Collateral Registry Act ensures that Micro, Small and Medium Enterprises (MSMEs) in Nigeria and low-income people can register their movable assets such as motor vehicles, inventory, machinery, livestock and accounts receivable in the National Collateral Registry warehoused in the Central Bank of Nigeria, and use same as collateral for accessing loans. A Registrar appointed by the Governor of the Central Bank of Nigeria heads the Registry and provides access to information on security interests by requesting persons or corporate bodies.
This would ease access to credit for growth by broadening the scope of acceptable collateral, foster financial inclusion, allow for asset diversification and improve assets liquidity especially for short- and medium-term assets. The Collateral Registry operates a web-based system that permits lenders to confirm any prior security interests and register security interests over movable assets provided as collateral, thus reducing costs and promoting prudent lending.
The collateral registry was implemented in partnership with the Central Bank of Nigeria, and funded by the UK’s Department for International Development, DFID.