Assets in CBN’s National Collateral Registry Hits N1.561tn

Obinna Chima

A cumulative of 154,827 micro, small and medium scale enterprises (MSMEs) have used movable assets valued at N1.561 trillion to obtain loans from financial institutions since the National Collateral Register (NCR) was passed into law, THISDAY’s investigation has revealed.

The latest NCR report obtained by THISDAY showed that a breakdown of the amount recorded between January 1, 2017 and December 19, 2018, put the value of the assets at N1.209 trillion; $1,142, 389,799.12 (N349,571,278,530.72) and €6,080,004.36 (N2,121,921,521.64).

In pursuant of the Central Bank of Nigeria’s (CBN) mandate on sustainable economic inclusive growth and financial inclusion, the apex bank in collaboration with the International Finance Corporation (IFC) had established the NCR.

The NCR is a financial infrastructure that seeks to deepen credit delivery to MSMEs through enhanced acceptability of movable assets – equipment, machinery, vehicles, Keke – NAPEP, crops, livestock, account receivables, inventories, and jewelry – as collateral for loans by financial institutions.

It is a registry where security interests in moveable assets are registered after being used as collateral to obtain facilities from financial institutions.

NCR allows lenders to assess their priority interest in potential claims against particular collateral.

The objective, it was learnt, is to enhance financial inclusion in Nigeria, stimulate responsible lending to MSMEs, facilitate access to credit secured with movable assets, perfect security interests in movable assets, facilitate realisation of security interests in movable asset.

The key deliverable of the registry is to promote the acceptance of movable asset as collaterals for loans and contribute to economic growth and development of the country.

It was signed into law in 2017 by Vice President Yemi Osinbajo, during the period he acted as president.

Continuing, the report revealed that of the 154,827 MSMEs that used their movable assets to obtain loans from financial institutions, 22,251 were female-owned MSMEs.

It said, “Considerable number of borrowers secured credit from financial institutions in 2018 using their movable assets as collateral. The high number of borrowers that secured credit in 2017 is attributable to the high participation of smallholder farmers under the CBN Anchor Borrower’s Programme using cross-guarantee as collateral.

“During the year under review, there was an upsurge of lending using movable assets as collateral. This is attributable to the increase in the number of microfinance banks on the NCR portal as well as increased participation of deposit money banks and non-bank financial institutions. Out of the total amount of N1,209,381,006,933. 90, a sum of N43,618,262,792.17 went to female MSMEs.”

In addition, the report showed that a cumulative of 16,349 searches were conducted by both financial institutions and the public on the NCR portal.

Also, there was an upsurge of searches conducted by financial institutions in 2018 due to their increased participation in the movable asset lending regime and continuous sensitisation to the users to ensure they conduct searches to determine the level of encumbrances before undertaking any financial transaction.

Commenting on the milestone recorded in 2018, the report pointed out that during the year, 411 microfinance banks registered on the NCR portal as a result of intensive sensitisation campaign on the operations of the register carried out across the six geo-political zones of the country as well as other collaborative strategic enlightenment programmes.

“During the period under review, the number of financial institutions that registered on the National Collateral Registry portal increased by 343 per cent, when compared with the 2017 figure which was 103 financial institutions. This was the result of the various aggressive education and awareness campaign on secured transactions in moveable assets conducted under the National Action Plan.

“Also, during the period under review, the number of registered financial institutions that registered financing statements on the NCR portal increased by 89 per cent when compared with the 2017 figure which was 36 financial institutions. This was the result of the various aggressive education and awareness campaign on secured transactions in moveable assets conducted under the National Action Plan,” it stated.

Some of the challenges faced included paucity of funds for sensitising the judiciary and Nigeria police on the legal implications of the STMA Act, 2017; the need for a driver to move NCR staff to strategic meetings and answer to financial institutions complaints where necessary considering the present location of the office; and low usage of the Collateral Registry System especially bank and reluctance of financial service providers to appreciate the benefits of Asset-Based Lending, among others.