Accessing Finance with Movable Collateral: The Flipside for Micro, Small and Medium Enterprises in Nigeria

Abstract

It is now a common view that lack of access to adequate finance is the bane of Micro, Small and Medium Enterprises (MSMEs) in developing economies. It is also widely noted that MSMEs difficulty in accessing finance is mostly due to their lack of fixed assets such as land or buildings which institutional lenders demand as collateral. Influenced by the International Finance Corporation, Nigeria in 2017 enacted secured transactions laws which establish financial infrastructures for securing credit with movable assets. Until after some years, an empirical study of the impact of the laws on MSMEs’ access to finance would be premature and inconclusive. This paper is a theoretical analysis that engages the question; how can a legal and institutional framework for accessing credit with movable collateral solve the problem of access to adequate finance for MSMEs in developing economies like Nigeria?

Keywords: MSMEs finance, access to finance, movable collateral, macro-economic variables, secured transactions laws