Osinbajo signs into law two business-friendly bills

Acting President Yemi Osinbajo has signed into law two bills from the National Assembly that will ultimately facilitate access to more affordable credit for Nigerian small and medium scale entrepreneurs and ease doing business in the country.The Secured Transactions in Movable Assets Act, 2017 and the Credit Reporting Act, 2017, were the new acts passed into law.The Secured Transactions in Movable Assets Act, otherwise known as Collateral Registry Act ensures that Micro, Small and Medium Enterprises (MSMEs) in Nigeria are able to register their movable assets such as motor vehicles, equipment and accounts receivable in the National Collateral Registry. Under this law, same can be used as collateral for accessing loans.This increases the chances at accessing financing, thereby tackling one of the major obstacles faced by MSMEs.The Credit Reporting Act, on the other hand, provides for credit information sharing between Credit Bureaux and lenders (such as banks), as well as other institutions that provide services on credit such as telecommunication companies and retailers.Laolu Akande, Osinbajo’s spokesman said that access to credit is critical to economic growth and considered to be the motor for driving private sector development. He said this while announcing the signings via a statement on Wednesday.He also noted that despite this, in Nigeria more than 70% 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 judgement, as well as unacceptable collateral. The two new Acts remove those obstacles for MSMEs.“Traditionally, banks only give loans to businesses that can provide fixed land and property as collateral.“This shuts out MSMEs which usually own only movable assets like motor vehicles and equipment. The Collateral Registry Bill, 2017, will give confidence to lenders to utilise the Registry and thereby make credit available to MSMEs and individuals through the use of their movable assets as collateral.“The Credit Reporting Act now enables lenders to make reasonable judgement on whether or not to extend credit to an individual, and reduces the cases of bad loans”, Akande further said.The spokesman recalled that the two bills were put forward to the National Assembly as part of the 60-Day National Action Plan for Ease of Doing Business initiated by the Presidential Enabling Business Environment Council (PEBEC).“That promise was kept by the National Assembly last week with the Bills forwarded to the Acting President for assent.“With the passage of these Acts, the existing Central Bank of Nigeria (CBN) Guidelines regulating the operations of the National Collateral Registry and Credit Bureaux have now been replaced by formal legal frameworks.“The passage of these Acts would facilitate the achievement of the goals of the Presidential Enabling Business Environment Council (PEBEC) set up by President Muhammadu Buhari in July 2016 and chaired by the Vice-President to progressively make Nigeria an easier place for businesses to start and thrive”, he explained further.