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CBN, IFC to launch collateral registry in June

By on March 26, 2015

The International Finance Corporation and the Central Bank of Nigeria are collaborating to launch National Collateral Registry in June, the Project Manager, IFC, Mr. Ubong Awah, has said.

He stated this at a three-day workshop on the N220bn Micro, Small and Medium Enterprise Development Fund.

In his presentation entitled, “Collateral registry and MSME financing”, Awah said the planned collateral registry would help to stabilise the MSME financing and also boost the confidence of Nigerian banks in playing active roles in financing the sector.

According to him, the MSME sector is an important catalyst for economic growth and financing the sector needs serious attention.

He said, “As an organisation, the IFC is bringing the experience we have garnered over the years across geographies to bridge the knowledge gaps and to lay emphasis on the fact that globally, collateral for the MSME is moving away from fixed assets to movable assets, hence the need to establish a collateral registry for the financial industry. We are excited to partner the Central Bank on this initiative.”

The CBN’s Director, Development Finance Department, Dr. Mudashiru Olaitan, said the workshop was organised to cross-fertilise ideas and bridge the knowledge gap about the MSME sector by the lending institutions and correct the wrong perception of the risky nature of the sector.

Olaitan, who was represented by the Assistant Director, MSME Development Fund, Mr. Tobin Jonathan, said, “The rejection rate of the MSME application by commercial banks is very high. We are aware this is necessitated by the banks’ aversion to risk due to lack of entrepreneurial skills and poor governance structure of most MSMEs, hence the need for the workshop to enlighten the bankers and encourage them more on the need to partner us on the need to grow the sector.”

According to him, the MSMEs are the engine room for economic growth, vehicle for job creation, tools for poverty alleviation and wealth creation for any country’s economy.

The Assistant Director, Development Finance, CBN, Mrs. Amina Umar, said since the N220bn MSME intervention fund was launched in 2014, the uptake by the Deposit Money Banks had not been encouraging.

“There is then the need to interact with the SME officers of banks to understand the banks’ challenges in the MSME financing,” she said.

According to her, it is the hope of the CBN that with the workshop more than 50 per cent of the fund would have been accessed by the end of 2015 in compliance with the target set by the Bankers’ Committee and driven by the economic development, sustainability and gender panel chaired by Mrs. Bola Adesola, who is also the Managing Director, Standard Chartered Bank.

Umar was of the opinion that at the end of the workshop, banks would increase awareness about the intervention fund, build capacity within the sector, develop innovative MSME financing products and also take advantage of the over 17 million MSMEs within the sector.