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Vice President, Yemi Osinbajo SAN

Acting President Yemi Osinbajo has signed into law two bills to drive access to more affordable credit for entrepreneurs in Nigerian. The laws are: the Secured Transactions in Movable Assets Act, 2017 (otherwise known as Collateral Registry Act) and the Credit Reporting Act, 2017.

The purpose of the Collateral Registry Act’ is to encourage Micro, Small and Medium Enterprises (MSMEs) in Nigeria to register their movable assets and accounts receivable in the National Collateral Registry and be able to use them as collateral for accessing loans. The credit system has mostly demanded for landed properties as collateral.

The Credit Reporting Act provides for credit information sharing between Credit Bureaux and deposit lenders as well as other institutions that provide services on credit such as telecommunication companies and retailers.

A Credit Bureau will collect information relating to the credit ratings of individuals and make it available to financial institutions that need such information.  The information will be used to rate an individual’s credit-worthiness and whether or not to grant loan applications.

The Collateral Registry Act, 2017, will enable lenders to utilise the Registry and thereby make credit available to MSMEs and individuals who can provide cars, equipment and other movables as collateral.

The Credit Reporting Act will make lenders decide on whether or not to extend credit to an individual, and reduces the cases of bad loans from information of credit rating.

The National Assembly had on Feb. 21 committed to passing the two bills as part of the 60-Day National Action Plan for Ease of Doing Business initiated by the Presidential Enabling Business Environment Council (PEBEC).

The Acts, thus replace the existing Central Bank of Nigeria (CBN) guidelines regulating the operations of the National Collateral Registry and Credit Bureaux by formal legal frameworks.

 By Sola Akinyemi