Acting President Yemi Osinbajo has signed two new laws that would support MSMEs to access capital for their businesses.
Mr. Laolu Akande, Osinbajo’s spokesman, said in a statement on Tuesday that the acts include the Secured Transactions in Movable Assets Act, 2017 (otherwise known as Collateral Registry Act) and the Credit Reporting Act, 2017.
Akande added that while the Collateral Registry Act ensures that Micro, Small and Medium Enterprises (MSMEs) could register their movable assets and use same as collateral for accessing loans, the Credit Reporting Act provides for credit information sharing between Credit Bureaus and lenders and other institutions that provide services on credit.
“This, in turn, will increase their chances at accessing financing and tackle one of the major obstacles faced by MSMEs,” he said.
“Access to credit is critical to economic growth and is considered to be the motor for driving private sector development. However, in Nigeria more than 70 per cent of private enterprises, typically MSMEs, have limited or no access to credit.
“Credit applications get rejected due to insufficient credit history and information for the lender to use to make a reasonable jugement, as well as unacceptable collateral. The two new Acts remove those obstacles for MSMEs.
“Traditionally, banks only give loans to businesses that can provide fixed land and property as collateral. This shuts out MSMEs, which usually own only movable assets like motor vehicles and equipment.
“The Collateral Registry Bill, 2017, will give confidence to lenders to utilize the registry and thereby make credit available to MSMEs and individuals through the use of their movable assets as collateral.”
