Before now, potentials of credit delivery had not been optimally realised in Nigeria.
But in order to change the trend, legal luminaries and giants in the nation’s financial sector converged on Abuja via a virtual workshop to discuss prospect of movable assets and commercial transaction. KEHINDE OSASONA reports.
Between financial sector and quick dispensation of justice
Last week, stakeholders in both the financial sector and legal parlance converged on Abuja to formalise arrangements on the workability of commercial transactions, a new initiative that was mooted to ensure secured transactions in movable assets.
So, when the opportunity came to revisit the matter at the opening ceremony of a Two-day World Bank/CBN organised Specialised Virtual Workshop for Judicial Officers, it was exhaustively discussed with stakeholders taking positions on the matter.
The theme of the workshop is: “The Role of the Judiciary in Ensuring the Effectiveness of the Secured Transaction in Movable Assets and Credit Reporting Act”
While the workshop lasted, the Chief Justice of Nigeria, Tanko Muhammad, the administrator of the National Judicial Institute, Justice Rosaline Bozimo, and stakeholders from both the financial sector and judicial firmament all advocated that litigation in commercial transaction be given accelerated hearing in Nigeria’s court.
While giving an opening address at the workshop, CJN Muhammad noted that the country’s financial sector stands to benefit from quick dispensation of justice in commercial transactions.
According to the CJN, credit reporting reforms in Nigeria require special attention from the judiciary, stressing the need for quick dispensation of justice in the sector.
He noted further that credit reporting reforms are a critical position in the economy given that movable assets are involved.
Small businesses in the country according to the CJN require access to credit to thrive and the rights of the relevant parties to a transaction must also be protected.
“Against this background, I wish to state that potential investors often hinge their decisions to come to Nigeria on enforceability of their rights in any commercial venture.
“Therefore, courts must be versed with credit transactions principles, especially with the passage of the STMA Act and Credit Reporting Act, 2017.
This means that there is a need for the judiciary to be strengthened to help the financial sector protect credit transactions. The financial sector and indeed the entire economy stand to benefit from quick dispensation of justice in commercial or business transactions.
“As access to credit is necessary for the economic development of Nigeria, it behoves the judiciary to protect parties to a transaction and ensure fair and ethical standards.
The purpose of both Laws is to facilitate and promote access to credit and enhance risk management in credit transactions.
“The protection of the rights of parties in a credit transaction would promote responsibility in the market and encourage responsible borrowing,” he said.
While assuring that the judiciary will continue to ensure that disputes arising from moveable assets lending are resolved speedily in line with constitutional provisions, he noted that access to finance remained vital to the development of any economy.
Aligning herself with the position of the CJN, the Administrator of the National Judicial Institute (NJI), Justice Rosaline Bozimo, reiterated that the principal objective of moveable assets financing laws globally is to contribute to the sustainability and stability of the financial system of every economy while protecting investors and financiers alike.
Bozimo, who commended the management and staff of the Juris Law Office for sustaining the mutual cooperation and collaboration in organising workshops, added that it would help in deepening the jurisprudence of judicial officers.
According to her, the workshop was in line with the statutory mandate of the Institute to organise courses, workshops and conferences for the continuing judicial education of Judicial Officers.
“Distinguished participants; this workshop provides a platform to share knowledge and cross fertilise ideas from other jurisdictions amongst stakeholders on how to ensure efficient adjudication of disputes arising from secured lending in moveable assets in Nigeria.
“Research has shown that small and medium scale enterprises constitute about 80% of Nigerian businesses; therefore, they are very crucial to the sustenance of our economy.
To this end, the Secured Transactions in Moveable Assets Act, 2017, was enacted to ultimately facilitate easy access to credit facilities by micro, small and medium scale enterprises.
“The introduction of the Act into the Nigerian legal system is a timely development that will pave the way for creditors to extend credit for the development of micro, small and medium scale enterprises.”
BoA boss’ take
Speaking at the workshop, the managing director/chief executive, Bank of Agriculture (BoA), Dr. Kabiru Adamu, described the NCR as one of the programmes that had made funds available to the MSMEs subsector of the economy, saying it has impacted and enhanced MSMEs lending in the country.
BoA, according to Adamu, had from November 2016 to date registered about 36.9 billion assets including over 15,000 small holders.
“Apart from providing alternative to traditional collateral in Nigerian banking industry, the registry is equally generating database for credit history for micro enterprises which was a problem for the banks.
“We cannot thank the CBN enough for the establishment of NCR and that goes to tell you that clearly, the current CBN governor has left indelible mark in the sands of history, we are eminently proud of him as a bank,” he said.
While advocating further, the BoA helmsman recommended the establishment of a special court to handle cases of NCR, noting that such move would encourage the banking industry in Nigeria to deploy micro credit to MSMEs.
A tie-back and matters arising
While highlighting some of the achievements of the NCR in 2019, the Central Bank governor, Godwin Emefiele, said as at January 31, 2019, 628 financial institutions comprising 21 deposit money banks, four merchant banks, one non-interest bank, four development finance institutions, 551 microfinance banks, 13 non-bank financial institutions, and 34 finance companies had been registered on the Registry’s portal.
He said lending banks had also registered interest on movable assets worth N1.23 trillion, $1.14 billion and €6.08 million through 41,408 financing statements.
He added that within about 18 months, over 41,000 moveable assets with values of over N1.4 trillion, including those in dollar and Euro denominations had been registered in registry.
“This underscores the potential of movable assets as collateral to enhance access to credit and, hence, our resolve to drive its effective implementation.”
On the rationale for the NCR, Emefiele said: “You will all recall that one of the biggest problem that the MSMEs face in Nigeria given the fact that we recognize their contribution to economic growth and development in any economy- the biggest constraints they have often gone through is their inability to provide acceptable collateral for the loans they seek to obtain from the banks.
“Banks and financial institutions themselves have often used their inability to provide collateral as the reasons they cannot lend to them.
So, at the CBN, we thought that we must break this jinx and so we said access to finance must be a thing of the past in Nigeria for small businesses.”
He said: “And that was how we thought about the fact that if you are a hairdresser and the equipment you have is your hairdressing equipment, if you are a tailor and what you have is a sewing machine, if you are a barber and the barber equipment is your machine; these are moveable assets which banks say they cannot accept as collateral.
“We thought there is a need to set up a secured transaction and movable assets registry that is the National Collateral Registry, wherever these assets are registered with the Bank Verification Number (BVN) of these potential borrowers that it is possible for banks to accept this collateral for loans.”
