The Credit Crunch : How the Use of Movable Collateral and Credit Reporting Can Help Finance Inclusive Economic Growth in Nigeria
Nigeria is an entrepreneurial economy with an estimated thirty seven million Micro, Small, and Medium-sized Enterprises (MSME) in the country, and their contribution to economic growth and job creation is significant. There are also a large number...
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| Language: | English en_US |
| Published: |
International Finance Corporation, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/821631489056930708/The-credit-crunch-how-the-use-of-movable-collateral-and-credit-reporting-can-help-finance-inclusive-economic-growth-in-Nigeria http://hdl.handle.net/10986/26275 |
| Summary: | Nigeria is an entrepreneurial economy
with an estimated thirty seven million Micro, Small, and
Medium-sized Enterprises (MSME) in the country, and their
contribution to economic growth and job creation is
significant. There are also a large number of self-employed
entrepreneurs who support themselves and their families by
supplying goods and services to the economy. Many of these
businesses have the potential to become bigger and more
prosperous, but their growth is restricted for a variety of
reasons. Access to finance has been singled out as a crucial
prerequisite to the growth of these businesses. This report
identified collateral as the missing link between the
small-scale business sector and the financial institutions
that could provide the necessary capital for them to grow.
This means formal lending is virtually inaccessible for
these small businesses and entrepreneurs, who instead rely
on informal, unregulated, and unpredictable credit in order
to expand their operations. To improve access to finance and
promote inclusive economic growth, the Central Bank of
Nigeria (CBN), in partnership with the International Finance
Corporation (IFC), a member of the World Bank Group and the
largest global development institution focused on the
private sector in emerging markets, has established the
National Collateral Registry and is supporting the
development of a modern credit reporting system in Nigeria.
This new financial infrastructure will allow for increased
use of moveable and reputational collateral to make it
possible for more MSMEs to access financing through the
formal sector. |
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