June 14, 2017 By Rafieu Williams
With support from the World Bank and International Finance Corporation (IFC), the Bank of Sierra Leone (BSL), has officially launched the Sierra Leone collateral registry at the Sierra Leone Bank Complex, Kingtom, in Freetown.
The collateral registry, which aimed at providing a platform to access loans for small and medium enterprises, was launched on Monday, 12th June, 2017.
Chairman of the ceremony, Mr. I.K. Lamin, Senior Director in the Governor’s Office of the Bank of Sierra Leone, said the collateral registry was established to simulate responsible lending to especially Micro, Small and Medium Enterprises (MSMEs), by providing a mechanism for efficient registration of security interests in movable properties.
“Micro, small and medium enterprises are considered the engines for economic growth and also provide positive social impact in the lives of citizens of a country. In Sierra Leone, they are faced with problems that limit their contribution to prosperity and growth. One such problem is the lack of adequate access to finance,” he said.
He said they decided to launch the registry in order to reduce distorted information problem associated with extending credit and increase the chances of loan repayment, adding that banks require collateral from the borrowers.
“Movable assets are the main types of collateral that firms especially MSMEs, can pledge to obtain bank financing,” he said.
Chief of Staff of State House, Saidu Cotton Sesay, said small and medium enterprises (SMEs) have the potential to create jobs, noting that unlocking such potential requires the combine efforts of government and financial institutions.
“I have personally experienced the difficulty of making decisions to lend SMEs, so, I can understand the reasons for extreme caution amongst agencies and institutions in the business of giving loans to small business,” he said.
He congratulated the Bank of Sierra Leone, the World Bank and the International Finance Corporation (IFC), Ministry of Trade and Industry, the technical working groups, among others, whose diverse contributions have led to the achievement of the milestone.
Minister of Finance and Economic Development, Momodu Kargbo, said President Dr. Ernest Bai Koroma has on several occasions stated that SMEs are one of the key pillars for the growth of rural communities and aver very much crucial to the economic development of Sierra Leone.
“It is also clear that access to finance alone is not enough but it must also be adapted to meet the requirement of our MSMEs. The launch of the Sierra Leone collateral registry is a step in the right direction,” the minister said.
He, however, said the launch of the registry must go together with financial education and consumer protection.