Business owners in Nigeria can now heave a huge sigh of relief as the Federal Government approved the usage of movable collateral for collecting loan facilities from Commercial banks in Nigeria.
The cheerful news was announced by the Senior Special Assistant to the President on Industry, Jumoke Oduwole in Lagos, Nigeria.
Before now, lots of SME owners had always struggled to meet the stringent condition of using landed properties as collateral before meeting the criteria of obtaining loans from banks.
The SSA reiterated the plans of the FG to stimulate access to loan facilities by micro, small & medium enterprise ( MSMES). This desire gave birth to the National Collateral Registry Bill which was proposed by the National Assembly and passed into law by the Government of the Federation.
A staggering 85% of SMES in Nigeria presently contribute to more than 50% of the nations Gross Domestic product . This figure is set to increase in 2018 with the approval of the NCR.
The need to add value to non oil exports and enable small business owners to prosper was a key ingredient in the master plan by the FG.
The law has the backing of the Central Bank of Nigeria as attested to by the CBN governor, Godwin Emefiele. He mentioned the aim of NCR as increasing lending to MSME. The idea is to increase the number of SMES that are able to secure loan facilities as currently done in China, where it aided in a massive increase in the percentage of SME that were able to have access to loan facilities. Collateral registry also precipitated a quantum growth of SME owners securing loan via movable assets. The number of SMES owners quadrupled within last year in China.
The similar scenario played out in Afghanistan as 90% of loans by SME donor agencies were approved for their owners. Emefiele was optimistic that when eventually operational, the National collateral registry will increase lending by banks to the non oil sector by 10% from 0.067% in the next couple of years. Already, a total of 16,236 financial statements for 20,684 movable assets have been registered on the NCR platform alone. The total value of these movable assets amounted to N392 billion . This no doubt a giant stride in government efforts to create an enabling environment for the small and medium scale Enterprise owners in Nigeria.