Osinbajo Signs 2 Bills Into Laws To Ease Credit Access for Small Businesses
It is more money for medium and small enterprises as they would now have better and easier access to credit facilities.
This is because of the two bills Acting President Yemi Osinbajo has signed into law.
The laws are: The Secured Transactions in Movable Assets Act, 2017 (otherwise known as Collateral Registry Act) and the Credit Reporting Act, 2017.
The Collateral Registry Act’ ensures that Micro, Small and Medium Enterprises (MSMEs) in Nigeria can register their movable assets and accounts receivable in the National Collateral Registry and use same as collaterals for accessing loans.
This in turn will increase their chances at accessing financing and tackle one of the major obstacles faced by MSMEs.
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 is a company that collects information relating to the credit ratings of individuals and makes it available to financial institutions that need such information.
Such information is used to determine an individual’s credit-worthiness and whether or not to grant loan applications to such individuals.
Access to credit is critical to economic growth and is considered to be the motor for driving private sector development.
However, in Nigeria more than 70 per cent of private enterprises, typically MSMEs, have limited or no access to credit.
Credit applications get rejected due to insufficient credit history and information for the lender to use to make a reasonable judgment, as well as unacceptable collateral but the two new Acts remove those obstacles for MSMEs.