Liberians without land or a house could soon borrow against a vehicle or a piece of equipment under an enhanced collateral registry the Central Bank is putting before a national conference in September on loans that are not being repaid.
Non-performing loans have fallen but remain high enough to require a coordinated national response, Executive Governor Henry F. Saamoi said Wednesday. When banks cannot recover what they lend, he said, they lend less, and the businesses that need financing to expand and hire feel it first.
"NPLs are not just a banking issue. This is about the entire country," Saamoi said. "If we resolve NPL issues, we'll be able to avail credit to all sectors of the economy."
The registry is designed to widen what counts as security by admitting a broader range of movable and immovable assets, the CBL says. Cllr. Alphanso Zeon, the bank's head of corporate communications, said it could change how Liberians reach credit, and named vehicles and equipment as examples.
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"If you don't have a house, you don't have land, you can be able to have something as collateral to get a loan," Zeon said.
The conference will bring together the Executive, the Legislature and the Judiciary along with banks, lawyers, business leaders and development partners, Saamoi said, and is meant to produce practical solutions on loan recovery, collateral enforcement, credit discipline and responsible lending rather than to apportion blame.
Recovery runs through the courts, which is why the Judiciary is at the table. Zeon said banks trying to foreclose on mortgaged property can be held up by extended proceedings, motions and continuances.
Euphemia Gbadee Swen-Monmia, acting deputy governor for economic policy, said the banks cannot fix the problem by themselves.
"The non-performing loan issue is not an issue that can be addressed by the banks alone. We need a multi-approach to resolving this issue," she said.
The announcement came at a media orientation the CBL held before the conference. Zeon said the bank was not asking journalists to drop critical reporting but wanted them to understand the policy issues first. Daniel Sando, deputy information minister for press and public affairs, said wider public understanding of financial-sector policy could keep future enforcement against major borrowers from being dismissed as a political witch hunt.
