Expert urges CBN to improve awareness on National Collateral Registry standard

Mrs Raliat Oyetunde, Chief Executive, Prinsult Consulting and a business expert on Monday, urged the Central Bank of Nigeria (CBN) to deepen awareness and improve publicity about the National Collateral Registry (NCR).

Oyetunde, told our reporter that deepening awareness on the registry would enhance financial inclusion and access to credit for Small and Medium Enterprises (SMEs).

NCR is an online centralised database where moveable assets pledged as collateral are registered to avoid the re-pledging of those assets.

Established in 2016 by CBN, NCR enables borrowers to use movable assets such as inventory, livestock, crops, equipment, vehicles and accounts receivable as collateral for loans instead of immovable property.

The initiative, supported by the International Financial Corporation (IFC), seeks to facilitate easy lending by financial institutions to individuals, farmers, micro-entrepreneurs and SMEs.

The Chief Executive, Prinsult Consulting, a business development service provider, also said that many SMEs were oblivious of the existence of the registry.

“Whatever benefits the registry might have on businesses is being eroded with poor publicity and awareness among business operators which will reduce the initiative’s success rate.

“Since the registry is meant to usher in a secured lending regime in the country by minimizing risks associated with lending to small businesses, CBN should educate and encourage financial institutions to embrace it,” she said.

Oyetunde stressed that the multiplier effects of deepening awareness and acceptance would translate to job creation, boost innovation, increase productivity and improve financial inclusion of SMEs.

She stressed that many financial institutions were yet to embrace the innovation in verifying the creditworthiness of lenders.

According to Oyetunde, continued insistence of some financial institutions on fixed assets as collateral will further exclude the SME sector and limit access to finance.

“Lack of adequate collateral has prevented many SMEs from accessing capital needed to grow and expand their businesses from financial institutions.

“Instead, most of these SMEs use personal savings, reinvested profits and loans from family and friends as a source of business financing.

“Using moveable assets as collateral will allow more MSMEs to access financing through the formal sector.

It is worthy of note that Nigeria is the fourth country in Africa to establish a Collateral Registry System after Ghana, Liberia and Malawi.