The International Finance Corporation, in conjunction with the Central Bank of Nigeria, is set to establish a collateral registry, which will enable individuals to obtain loans from financial institutions using movable assets and intellectual property as collateral, in the first quarter of 2016.
This was disclosed by the Central Bank of Nigeria (CBN)’s deputy director, Development Finance Department, Mainasara Mohammed, during a workshop for journalists on Credit Reporting and Collateral Registry organised by the CBN in collaboration with the International Finance Corporation (IFC) in Lagos.
A collateral registry is a databank where moveable assets such as cars, inventories, and equipment as well as intellectual properties are registered for the purpose of being used as collateral to obtain facilities from financial institutions.
According to Mohammed, the collateral registry is aimed at getting financing across to micro, small, and medium scale businesses without using immovable collateral such as land as bonds. He noted that the launch of the registry is expected to help increase the level of loan that goes into the MSME sector and eventually drive growth in the Nigerian economy.
On his part, the project manager, Nigeria Financial Infrastructure Project at the IFC, Ubong Uwah, said that the collateral registry will also contribute to economic growth by decreasing the cost of credit as “better risk management and prudent lending paves way for efficient lending, lower non-performing loans, lower interest rates, and a move from informal to formal lending.”