MSMEs To Get Collateral Registry, Credit Reporting System

Two financial infrastructures, the collateral registry and the Credit Reporting System, have the potential to improve access to finance for micro- small- and medium enterprises (MSMEs), which are critical to economic development, experts say.

Through the two financial infrastructures, businesses could leverage their assets and borrowing records to obtain credit for growth and to promote prudent lending.

Mr Mawuko Williams, Senior MSME Expert with the School of Finance & Management, speaking at a training programme for journalists on the Collateral Registry and Credit Reporting System, said the Collateral Registry would help bridge the MSME finance gap.

'Knowing that these MSMEs contribute significantly to economic growth and job creation in Ghana, the Collateral Registry will help bridge the MSMEs finance gap by facilitating easier access to funding, which will ultimately boost production and lead to creation of employment,' he said.

He said the collateral registry for instance allows small-scale entrepreneurs to secure loans against their assets and helps the banks to lend without fear to the MSMEs sector.

The Registry is supported with a strengthened Credit Reporting System to promote secured transaction and responsible lending framework.

Lengthy legal processes and exposure of some debtors to several financial institutions are situations, which the credit referencing bureau and collateral registry could solve.

In the main, the Collateral Registry allows lenders or financial institutions to determine and register their security interests over assets provided as collateral and make this available to lenders who need information on borrowers.

Mr Williams said the credit referencing was a major step towards building a credit culture and helps to compile information about individuals and corporate on credit repayment records, issue of dud cheques, among others before creating comprehensive credit reports that can be availed to lenders or creditors.

Mr Williams said honest borrowers could boost their credit worthiness by their transactions activities by repaying loans and other bills on time and generally demonstrating financially responsible behaviour.

He said good records could result in lower interest to the benefit of borrowers.

The financial literacy and awareness campaign training was organised by the Frankfurt School of Finance & Management (FS), in collaboration with the IFC/World Bank Group.

The overall objective of the campaign is to effectively raise public awareness on the financial infrastructures available to access finance through the use of the Collateral Registry and the Credit Reference Bureaus, as well as promote responsible lending and borrowing for personal and business purposes.

GNA