6 June 2019

Easing Access to Finance for Nigerians - Looking Back at the Achievements of the 8th Senate of Nigeria

Photo: 8th Senate of Nigeria
The 8th Senate of Nigeria focused legislative reforms on easing access to capital for Micro, Small and Medium Enterprises (MSMEs). To enable small companies gain better access to credit using movable assets as security, the 8th Senate was successful in getting the Secured Transactions in Movable Assets Act 2017 signed into law.
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The Secured Transactions in Movable Assets Act 2017

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Excerpted from sections of the 8th Senate 3-Year Report: Reviving The Economy, Creating Opportunities For Nigerians

At its inception, the 8th Senate of the Federal Republic of Nigeria adopted a Senate Legislative agenda focusing on three broad areas: Improving Livelihoods, Improving Governance and Improving Business. In the area of "Improving Business", the 8th Senate focused legislative reforms on … easing access to capital for Micro, Small and Medium Enterprises (MSMEs). To enable small companies gain better access to credit using movable assets as security, the 8th Senate was successful in getting the Secured Transactions in Movable Assets Act 2017 signed into law.

Background

Nigeria's population is the seventh largest in the world and is growing at an average of 2.7% a year. 70% of the population is under the age of 30 with a high rate of youth unemployment. Economic diversification and with it jobs will form the basis for economic growth, poverty reduction, and improved livelihoods. 96% of Nigerian businesses are SMEs… In order to enable these MSMEs create more jobs and opportunities for Nigerians, the legislative proposals of the 8th Senate focuses on the needs of MSMEs, particularly in easing their access to capital. The 8th Senate's objective is to have a large number of sustainable fast-growing small and midsize businesses that have access to capital and can drive productivity, job creation, poverty reduction and improvement in standards of living.

The Secured Transactions in Movable Assets Act 2017

The Secure Transaction in Moveable Assets Act, 2017 was a major attempt by the 8th National Assembly to further ease access to credit for SMEs through the establishment of a National Collateral Registry that will facilitate access to credit secured by movable assets. The Act makes more funds available for small businesses which will in turn create more jobs and increase productivity.

The Act:

  • The Act provides for secured transactions, registration and regulation of security interest in movable assets that will facilitate access to credit secured with movable assets.  Moveable collateral provides the basis for free-flowing credit markets and also reduces the potential losses lenders face from non-payment.  
  • The bill establishes the National Collateral Registry in the Central Bank of Nigeria (CBN) to receive, register and store information about security interests in movable assets. The registry will increase the availability of credit and reduce the cost of credit, as SMEs will leverage their assets into capital for investment and growth. Movable collateral provides the basis for free-flowing credit markets and reduces the potential losses lenders face from non-payment. Facilitates access to credit for new and small companies with movable assets as security.  
  • The National Collateral Registry will provide an effective way for lenders to find out whether the potential borrower has already granted a security interest in the collateral.

The Act is one of several legislations targeting easing access to finance. It provides for the registration and supervision of security interest in movable properties and secured transactions. This Act seeks to provide for the registration of financing statements and use of movable assets as acceptable security for accessing credit by individuals and micro, small and medium enterprises in Nigeria.

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