By Terfa Naswem
Senate President, Dr. Abubakar Bukola Saraki has said the new
legislations, Secured Transactions in Movable Assets Act and the
Credit Reporting Act passed by the National Assembly last June and
immediately signed into law by then Acting President Yemi Osinbajo
will support the growth of micro, small and medium sized enterprises
(MSME’s) through increased bank lending and reduce bank exposure to
loan defaults through pre-examination of credit worthiness for would
be borrowers.
Under the law, potential borrowers can now register assets other than
land and property as collateral to secure a loan. Now, one can
register his/her automobile or other worthy assets. Securing
financing through loans has long been a problem for Nigerian
entrepreneurs. Most MSME owners must rely on personal savings or
loans from family and friends to launch their business ventures. The
new law, also known and the Collateral Registry Act, allows banks to
increase lending to MSME’s, while not negatively impacting their
balance sheets.
Saraki who hailed the passage and the opportunity for economic and
MSME growth the new laws afford Nigerians stated that "this is a
win-win situation for our economy and society”. “The private sector,
the federal government and the National Assembly worked together to
create the enabling environment for MSME’s to grow, diversify the
economy and increase employment. We should all be proud of delivering
a law that will allow many people to provide for their families and
community.”
The Credit Reporting Act, allows credit information sharing between
credit bureaux and those companies that lend money or extend credit
for goods and services. Under the Credit Reporting Act, companies
will have access to the credit history to review whether there is a
history of loan defaults or other financial blemishes. This extra
layer of protection will serve to reduce lending risks, while
preserving credit services to borrowers with good credit histories.
“Combined, the new laws make good economic and business sense” stated
Saraki. “Already bank lending to MSME’s has increased and is expected
to grow considerably for the remainder of the year and in 2018.”
Saraki further noted that “in both developed and developing economies
small business growth is the engine of the economy and employment
growth. With a high unemployment in Nigeria, the growth and support
for MSME’s is critical.”
“The National Assembly will also be looking to see what existing
support programmes are working and can be created to help MSME owners
to better understand the use of credit, management skills training,
mentor relationships, marketing and how to pursue government
procurement contracts” Saraki added.
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