CBN Streamlines Collateral Requirements for SMEs

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                                    CBN Streamlines Collateral Requirements for SMEs


The Central Bank of Nigeria (CBN) has introduced measures to simplify the collateral requirement for lending to Micro, Small Medium-Scale Enterprises (MSMEs).
According to the Director, Development Finance Institution, CBN, Mr. Paul Eluhaiwe, the policy, which commences in 2014, will enable the MSMEs to use moveable collaterals to secure credits from financial institutions.
Eluhaiwe, said this while addressing journalists at the end of the MSME financing conference and D-8 workshop in Abuja on recently.
He added that the initiative became imperative since most banks depended on fixed collateral security to lend to the MSMEs.
Working with the International Finance Corporation, he said the CBN would put in place strategies that would ensure the successful implementation of the initiative.
Eluhaiwe said, “We will look at a situation where institutions that are rated in Nigeria will have increased substantially. That’s very important to us.
“Another issue is the collateral for entrepreneurs to access microfinance services, particularly loans. Most banks are not ready to give SMEs facilities and banks depend only on fixed collateral in this country.
“We want to be able to use movable collateral. We are working with the IFC. I have secured the approval of the CBN and we will ensure that the collateral registry is a movable collateral and we will be able to use it beginning from next year in this country.”
He said the initiative would help to ensure that funds were made available for entrepreneurs to grow their businesses at cheap rates.
Eluhaiwe said, “If this is done, operators will be able to operate because there will be funds and capacities will be built to create sustainability in the sector.
“The entrepreneurs, who are supposed to benefit, with movable collateral, they will have access to more financial services.”