The Central Bank of Nigeria (CBN) has revealed that Nigerians will soon be able to take bank loans using unconventional properties as benefits of the Nigerian collateral register (NCR) in view.
The NCR, to be launched in the first quarter of 2016, is an electronic public database that contains information on security interests in movable property aimed at improving ease of loan application for small and medium scale enterprises (MSMEs) in the country.
According to Mainasara Muhammad, Assistant Director, NCR Project, CBN, the registry will enable loan seekers use moveable assets such as cars, generators, deep freezers and farm products including crops (growing, grown, or to be grown), fish stocks, poultry and livestock (and their unborn offspring), seeds, fertilizers, manure can all be used as loan collateral.
“We want to take banking to the rural doorstep, whereby a bean cake seller can walk into the bank and say manager, tomorrow is Friday, I don’t have any money, I need N5,000 to buy beans, I want to fry bean cake tomorrow on our market day, and he’d give her the loan not based on collateral,” he said.
“You can go to the banks and say I have this, and I need a loan. The practice we have in most microfinance banks is that they would take your car and give you a loan and park it in their premises.
“Now, they’d take your car, register it and give it back to you, but note that someone already has an interest on that car.”
According to CBN, the registry provides a platform for searches, so that an interested party may find out if there are prior registrations against the assets offered by the debtors as collateral for a loan.
Ubong Awah, project manager of the Nigerian financial infrastructure project, revealed that the collateral registry has worked in Ghana, Malawi and Liberia, providing N45 billion ($226 million) in loans for Liberian MSMEs in one year.
“Three years after the project completion (in Nigeria), the aim is to have generated $20 billion in financing, benefiting 40,000 SMEs, 5,000 micro enterprises, and 8,000 women entrepreneurs,” Awah said.
CBN says the NCR will be launched in partnership with the International Finance Corporation (IFC), a member of the World Bank Group, and the Credit Bureau Association of Nigeria (CBAN).