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Borrowers and Lenders Act 2014 enacted

NOVEMBER 21, 2014 By Jariatu Bangura

Lawmakers this week enacted the Borrowers and Lenders Act, 2014, which will establish a legal framework on the standard of credit agreement in financing and banking system.

While presenting the bill for ratification, Minster of State, Ministry of Finance and Economic Development, Foday  B. L. Mansaray recalled that in 2009 the Bank of Sierra Leone, in collaboration with the International Monetary Fund (IMF), conducted an assessment of Sierra Leone’s financial sector, with the result of that assessment being the identification of various weaknesses in the financial system. Hence, he said, government sanctioned the Financial Sector Development Plan (FSDP) to address the said weaknesses and implement recommendations contained in the assessment.

Minister Mansaray said a key recommendation of the assessment was the immediate need to modernize, harmonize and where necessary introduce financial sector legislation in line with best practices. Accordingly, he said the Bank of Sierra Leone championed the enactment of the Companies Act of 2009, which provides for the registration, regulation and liquidation of companies; establishment of the Corporate Affairs Commission; the passing of the Bankruptcy Act of 2009, which sets out the legal procedure in relation to individuals, rather than companies, who become bankrupt or cannot pay their debts and the process of such declaration; the promulgation of the Payment System Act of 2009, which establishes and supervises the electronic and other payment systems, allowing the Accountant General’s cheques to become automated, bank transactions and revenue collection to be reported on real time basis.

He said  the Anti-Money Laundering and Combating of Financing of Terrorism Act of 2012 makes provisions for the criminalization, suppression and combating of money laundering and financing of terrorism and the setting up of a Financial Intelligence Unit, as an autonomous body to monitor and prevent financial linked to money laundering and terrorism finance.

Mr. Mansaray told lawmakers that part of the FSDP recommendations is  the Borrowers and Lenders Act which they were about to ratify. The Act, along with others, he said is aimed at strengthening the legislative framework and reforms in the financial sector.

He maintained that the Act will facilitate the use of moveable assets as collateral/securities for loans, by establishing the institutional framework whereby lenders can register charges on such moveable assets tendered by borrowers, thereby establishing collateral analogous to mortgages, which are created with respect to immoveable property.

In his contribution, Chairman of the Finance Committee, Hon Hassan Sheriff said the central bank must have the capacity to protect bilateral interest because the foundation has been laid with the passage of the Companies Act and the Bankruptcy Act respectively.