In May 2016, the Central Bank of Nigeria launched an online collateral registry. The new Registry implements Section 9 of the Collateral Transactions Regulations, which were issued by the Central Bank of Nigeria in 2014, under the power conferred by the Banks and Other Financial Institutions Act 2004, s57.
The 2014 Regulations were intended to “provide a regulatory framework for accessing credit secured with movable property, creation and perfection of security interests, and realization of security interests in movables”. (Section 1(1)).
Prior to the enactment of the 2014 Regulations, security over assets could not be registered if the assets did not fall within the list in the Companies and Allied Matters Act 2004, or relevant Bills of Sale legislation.
The 2014 Regulations now permit registration of “security interests in movable property created by an agreement that secures payment or other performance of an obligation, regardless of the form of the transaction, the type of movable property or the nature of the secured” (Section 3(1)). Security interests in future property may also be created (Section 4(2)).
In order to be effective, a financing statement in respect of that transaction must be registered at the Collateral Registry (Section 8(1)). Once registered, the security interest will have priority over unregistered security interests (Section 23(1)). Priority is otherwise generally determined by date of registration or possession, whichever occurs first (Section 23(2)).
The 2014 Regulations give priority to purchase money security interests (PMSIs) where the PMSI is perfected when the debtor receives the collateral (Section 27).
According to a World Bank report, there are approximately 37 million micro, small, and medium-size enterprises (MSMEs) in Nigeria, for which the new collateral registration regime will improve access to the capital needed for them to prosper.