Lilongwe, Malawi, February 4, 2016—IFC, a member of the World Bank Group, said today it helped establish an electronic registry for movable collateral in Malawi, as part of an overall effort by the government of Malawi and the World Bank Group to promote access to finance for micro, small and medium-sized enterprises to foster inclusive economic growth.
The collateral registry was officially launched in Lilongwe today, and will allow for the use of movable assets such as vehicles, machinery, livestock, inventory, and accounts receivables, as collateral for loans. This will increase the financing options for the small-scale business sector and individuals that lack traditional collateral such as land and buildings to access credit.
Mr Cliff Chiunda, Principal Secretary for the Ministry of Industry and Trade, said, “The establishment of the collateral registry, and the enactment of the law that underpins it, will encourage banks, microfinance institutions and leasing companies to provide lending secured by movable properties. This will greatly increase financial inclusion for small and medium-sized companies in Malawi.”
Alejandro Alvarez de la Campa, IFC Finance & Markets Global Practice Manager in Sub-Saharan Africa, said, “The use of movable assets will increase the ability of entrepreneurs to access finance and grow their businesses, which in turn allows them to create more job opportunities in the Malawian economy.”
Collateral registries are publicly available databases that allow financial institutions to register their security interests in movable assets used by borrowers for loans, and contain information on movable collateral belonging to potential borrowers. These registries enhance transparency in the credit system, and strengthen the financial infrastructure.
Malawi is the third country in Sub-Saharan Africa to establish a modern, online collateral registry with the support of IFC, following Ghana and Liberia. Since it was established in 2010, the collateral registry in Ghana has facilitated about $3 billion in loans secured with movable assets. Despite being launched at the height of the Ebola crisis in June 2014, the collateral registry in Liberia has facilitated about $230 million in financing, of which 30 percent has been for women entrepreneurs.