Access to finance is a vital factor in the growth and development of any economy. World Bank statistics indicate that Nigeria ranks 44th in the global access to finance index1 which demonstrates an upward progression from the previous year. More recently, Nigeria moved up 24 places in the World Bank’s global ease of doing business index2, and one of the key areas noted in the report is the Federal Government of Nigeria’s drive to expand access to credit for businesses particularly, Micro, Small and Medium Enterprises (“MSMEs”). Arguably, the most significant reform step taken by the FGN to earn this upward move was the passage into law of the Secured Transactions in Movable Assets Act 2017 (“the Act”).
In general, the Act provides a broad framework governing the creation of security interests in moveable assets, the rights and obligations of parties to registered security agreements, mechanisms for perfecting security interests in moveable assets, the creation of a national collateral registry and the determination of priority of competing interests in secured assets. Briefly stated, the Act provides legislative imprimatur to the past efforts of the Central Bank of Nigeria (“CBN”) to enhance such enterprises’ access to debt finance3.
This article presents an analysis of the key provisions of the Act and its impact on secured finance transactions in this market, having regard to the state of play prior to the passage of the Act, particularly, the Bills of Sale Laws applicable in a number of states4 (in this paper references to the “Bills of Sale Law” are references to the Bills of Sale Law of Lagos State).