The government of Liberia through the Central Bank of Liberia (CBL) has begun the development of a Secured Transactions/Collateral Registry program in the country.
The registry, which is purely an electronic program, is expected to be formally inaugurated in June this year, to register movable assets that debtors would want to put forth as collateral to lenders.
It is being developed by the CBL with technical support from the International Finance Corporation (IFC) to enhance increase financial access to small medium enterprises (SMEs) that do not have the type of collateral required by banks to access loan.
Speaking at a one-day stakeholders meeting with economic journalists in Monrovia on Friday, the head of the Registry, Mrs. Euphemia Gbadee Teeta Swen Monmia, said the registry will be seated at the CBL and will allow users to access information online in real time. She declared that the CBL will set up computer facilities at key stations across the country to allow businesses and ordinary people to learn about the program and make decision.
Giving some details about the registry, the registrar noted that the secured transaction registry will create opportunity for debtors to use their movable assets such as cars, equipments and other household and agricultural materials as collaterals in order to access loans for their businesses.
“Some of the benefits of the registry are that it increases access to credit and reduces risk of credit, reduces cost of credit, promotes credit diversification and increases market competition,” Mrs. Monmia added.
She stressed that the role of the registry will be to primarily register debtors’ movable collaterals so that lenders are able to easily access those assets and to ensure that the same assets are not offered as collateral to other lenders.
Mrs. Monmia noted that the establishment of the collateral registry is part of the mandate of the CBL as enshrined in the Central Bank of Liberia Act of 1999, and specifically consistent with Section 55 of said CBL Act of 1999 and Section 39 of the Financial Institutions Act of 1999.
She declared that the establishment of the registry is also pursuant to Chapter 5 of the Liberian Commercial Code.
Also speaking, Deputy CBL Executive Governor for Economic Policy Boimah Kamara observed that the collateral registry is a new business model being introduced in Liberia that would enhance financial access to businesses and bring transparency between the borrowers and lenders.
“This exercise is intended to bring transparency between borrowers and lenders. For example, you can’t take a loan from bank ‘A’ and use the same collateral to borrow from bank ‘B’. But, the movable assets will be registered in the system for all of its users to see,” said Mr. Kamara.
Some of the movable assets the collateral registry will registered include bank accounts, account receivables, vehicles and equipment for industrial use, agricultural products such as crops and livestock, consumer and household goods and inventory and raw goods, amongst others.
Immovable assets such as land and real estate buildings will not be captured in the registry as they are mainly required by banks as collateral for loans, the registrar said.