LILONGWE, February 4, 2016 – Malawi has become the third country in sub-Saharan Africa after Ghana and Liberia to establish a modern online collateral registry system to enable businesses and individuals access loans using movable assets. As in many other countries, financial institutions in Malawi traditionally require fixed assets such as land or buildings as collateral for loans.
The collateral registry, officially called Personal Property Security Registry was launched today together with the Malawi Business Registration System (MBRS). The collateral registry is an online public database that allows financial institutions to register security interests in movable property such as livestock, machinery, and vehicles facilitating the use of such collateral for loans. Collateral registries also mitigate the risk of customers and lower transaction costs.
“The collateral registry is a reform initiative by Government that will provide an alternative avenue for small and medium enterprises that do not have fixed assets to access loans easily and open a multitude of opportunities especially for women who form the bulk of small scale traders,” said Malawi’s Vice President Honourable Dr. Saulos Chilima when he launched the two systems.
The MBRS will facilitate the online registration of businesses, and automatically generate a Taxpayer Identification Number for the business. It will cut business permit processing time by more than half, significantly reducing transaction costs and saving time for businesses. “The new online and automated registration system will increase transparency and accountability, reduce corruption, and seal revenue leakages through online payment,” said Laura Kullenberg, World Bank Country Manager for Malawi.
The MBRS will help improve Malawi’s starting business indicator which has been deteriorating over the years. The World Bank Group’s 2016 Doing Business report ranks Malawi at 161 out of 189 economies on the starting business indicator.
Both the MBRS and the collateral registry are housed by the Department of the Registrar-General. The World Bank Group supported the establishment of the two systems with financing from two of its agencies, the International Finance Corporation (IFC) and the International Development Association. IFC also supported the establishment of the collateral registries in Ghana and Liberia.