28 Sep

Daily Watch – Collateral requirements for MSMEs ease, Pensions to be invested in infrastructure

The use of landed property will no longer be emphasized for small business operators (MSMEs) who have valuable moveable assets that can be used to secure funding, as some of their assets, including motor vehicles and bikes, may soon be approved as eligible loan collateral. This comes with the establishment of a national collateral registry by the Central Bank of Nigeria to reduce the difficulties encountered by MSMEs in accessing funds to develop their businesses. In Nigeria, the MSME sector accounts for about 90 million jobs in the economy. Of the entire sector, less than 15% of MSMEs have access to finance. Lack of access to financing, most notably working-capital financing, has led to the crimping of sector growth, and a loss in latent innovation, creativity and productivity.

Nigeria’s Contributory Pension Scheme, which is now N4.9 trillion strong, is being considered for part-deployment into long term infrastructural investment projects like roads and power. According to PenCom, the largest proportion of Retirement Savers is young, below the age of 50 years, and because they will not need their savings in the near term, those savings can be channelled into the financing of long term projects. Pension fund assets can be invested in infrastructure through infrastructure bonds or funds.

Resilient Africa, a South African property development and investment company, is investing as much as $150 million in Nigeria for the development of three retail malls, which are under construction. Resilient Africa owns the Delta Mall in Warri, which was opened in March this year. They also own the Owerri Mall, which will be opened in November this year, and the Asaba Mall which is still under construction, but will be completed in 2016.