Acting President Yemi Osinbajo has signed two new laws that would help facilitate access to more affordable credit facilities for businesses in the country.
In a statement, on Tuesday, Laolu Akande, Osinbajo’s spokesman, listed the acts to include the Secured Transactions in Movable Assets Act, 2017 (otherwise known as Collateral Registry Act) and the Credit Reporting Act, 2017.
He said the new laws were part of the Federal gGvernment’s reforms aimed at easing business operations in the country.
The new laws will empower Nigerians to use their reputation, generators, deep freezers, school certificates, farm produce such as rice and beans, and many unconventional properties.
The collateral register has been in the works for a number of years, with expectations that it would be signed into law early in 2016.
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% 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 judgement, 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 utilise the registry and thereby make credit available to MSMEs and individuals through the use of their movable assets as collateral.
Akande also said the Credit Reporting Act will further enable lenders “to make reasonable judgement on whether or not to extend credit to an individual, and reduces the cases of bad loans.”
“The passage of these Acts would facilitate the achievement of the goals of the Presidential Enabling Business Environment Council (PEBEC) set up by President Muhammadu Buhari in July 2016 and chaired by the Vice-President to progressively make Nigeria an easier place for businesses to start and thrive,” he said.