The Secured Transactions in Movable Assets Act (STMA) of 2017 will boost the micro, small and medium scale enterprises (MSMEs), experts have said.
Among others, the Act creates the National Collateral Registry (NCR), which facilitates the grant of soft loans with movable assets as collateral.
NCR Assistant Registrar, Mrs Bisi Toro-Popoola, said the law has made it possible for people to get loans using moveable assets such as farm produce, wrappers, household utensils, intellectual property, motorcycle, among others, as collateral.
A partner at Punuka Attorneys and Solicitors, Mrs Ebelechukwu Enedah, believes that effective implementation of the Act would ease access to finance by small businesses.
They spoke in Lagos at a workshop on the role of Secured Transactions in Moveable Assets Act in financing MSME in Nigeria.
It was organised by the Conference of Western Attorneys-General Africa Alliance Partnership (CWAG AAP) in conjunction with the NCR, which is under the Central Bank of Nigeria (CBN).
Based in the United States, CWAG is a bipartisan group, which works to promote the rule of law and foster international cooperation in transnational criminal matters.
It also provides and supports joint training programmes, international collaboration platforms, information exchange and knowledge sharing.
The CWAG AAP seeks to establish and foster relationships with justice and law enforcement agencies and officials throughout Africa to support the rule of law and combat transnational criminal activity.
Punuka Attorneys & Solicitors is the Nigeria Partner/Coordinator for CWAG AAP.
Enedah described the STMA as a laudable step in the right direction.
According to her, it was unfortunately that MSMEs, which represent 96 per cent of Nigerian businesses, is constantly plagued with the challenge of sourcing and raising capital.
She attributed the challenge to lack of immovable assets which lending institutions prefer as security for loans.
Enedah was, therefore, of the view that the STMA would help to address the challenges.
“It is hoped that this Act will assuage the imbalance and go a long way to redress the prevailing position to a large extent, as it seeks to stimulate and assist MSMEs in securing financing by giving legal backing to the perfection and realisation of security interests in movable assets.
“By implication, MSMEs can now secure loans with moveable assets. The Act also establishes the NCR to identify priority of competing interests in secured assets,” she said.
The workshop, she said, was to enhance a better understanding of the Act towards its implementation and enforcement to encourage MSMEs’ growth.
Cross River Attorney-General Joe Abang said STMA’s main objective was to enhance financial inclusion in Nigeria and stimulate responsible lending to MSMEs.
“To stimulate the economy, the Act establishes a regime that guarantees access to credit secured by moveable properties.
“In addition to the general objective of providing and developing a framework guaranteeing access to credit secured by moveable assets, the specific objectives of the Act include establishing a National Collateral Registry, stimulating affordable lending to MSMEs, facilitating the perfection and realisation of security interests in moveable assets and enhancing financial inclusion in Nigeria.
“It is hoped that the passage of the Act would facilitate the achievement of the goals of the Presidential Enabling Business Environment Council (PEBEC) set up by the President to progressively make Nigeria an easier place for businesses to start and thrive,” he said.
Toro-Popoola said the law provides that moveable assets used as collateral do no leave the owner. “The assets stay with you,” she said.
She, however, said the NCR is faced with lack of funds to implement nationwide awareness campaign strategy.
Besides, she said there had been low usage of NCR portal due to financial institutions’ reluctance of to appreciate the benefits of moveable asset-based lending.
Despite the challenges, Toro-Popoola said the NCR is gradually building the confidence of banks and other financial institutions in moveable assets financing.
According to her, over 600 financial institutions have registered and are leveraging the NCR infrastructure to advance credit to individuals and businesses.
The NCR, she said, also held a workshop for judicial officers on their role in the Act’s enforcement and in dealing with loan repayment defaults.
She added that the NCR enables businesses to leverage their assets to obtain credit for growth, among other benefits.
Other facilitators included Punuka Attorneys & Solicitors Senior Partner Chief Anthony (SAN), a senior staff attorney at the Northeast New Jersey Legal Services, Inc, John Ukegbu, i-naira.com founder Hilary Nwaukor, Mr Obinna Nwankwo of CBN Principal Legal Services Department, and Mrs Toro-Popoola.
Ukegbu gave a US perspective on secured transactions in moveable assets, Idigbe and Nwankwo gave an overview of the regulatory framework, while Nwaukor discussed the strategic importance of secondary derivative market platforms.
CWAG Director Markus Green gave an overview of CWAG’s activities and spoke on the workshop’s essence.
Idigbe said stakeholders, including lawyers, have a role to play in ensuring that market forces determine the grant of loans rather than the current monopolistic practice that is filled with hurdles for small businesses.
To underscore the need for stakeholders to accept the reforms, he referred to the words of a Chinese philosopher Confucius: “Only the wisest and the stupidest of men never change.”
Also at the event was presidential adviser/PEBEC Secretary Dr Jumoke Oduwole.
