Africa-Press – Lesotho. ARE you in need of a quick loan but do not have any assets that could be used as collateral? That should not be a problem, thanks to a new scheme launched by the Central Bank of Lesotho this week.
The Lesotho Electronic Registry in Movable Assets will enable Micro Small and Medium Enterprises (MSMEs) and households to place their movable assets such as livestock, account receivables, stock, equipment and intellectual property as collateral when seeking loans from the financial sector.
Speaking at the virtual launch, the Governor of the CBL, Dr Retšelisitsoe Matlanyane, said this is a key milestone in the development of a financial system in Lesotho. Dr Matlanyane said the project was in the making for a number of years in a quest to improve access to credit.
“The Lesotho Electronic Registry in Movable Assets (Lerima) is a culmination of collaborative efforts by the CBL, the World Bank, other stakeholders and the Central Bank of Ghana which provided technical assistance,” Dr Matlanyane said.
The development of Lerima, she said, is part of the financial reforms under the financial sector development strategy aimed at strengthening the financial system, fostering financial inclusion and improving access to finance which is a big problem in the region.
Dr Matlanyane said collateral facilitates credit by reducing potential loss on default loans. “They are adding movable assets to the list of assets that can be used as collateral, unlike previously where only immovable assets such as land and property were the only ones appreciated as collateral,” she said.
“Some of the benefits of this facility include support for economic growth through increased access to finance, reduced cost of credit, increased loan approval for MSMEs.
She added that the facility will also go a long way in providing credit to women who have been marginalised despite the fact that they are the drivers of the MSMES sector.
Ubong Awah, a representative of the International Finance Corporation, applauded Lesotho for this milestone. According to Awah, in the developed economies movable loans make up to 60 percent of loans.
“Studies have shown that movable loans help improve productivity, promotes innovation and build confidence and trust in the credit system,” Away said.
The chairman of the Banker’s Association of Lesotho, Molefi Leqhaoe, said this initiative will encourage banks to increase their credit risk appetite.
“I think we can all agree that this initiative will increase access to finance which is a serious challenge in Lesotho,” Leqhaoe said.
On behalf of the Minister of Finance, Principal Secretary Nthoateng Lebona said a new dawn is coming that will promote entrepreneurship as credit will now be extended to MSMEs, which are run by young people unlike in the past where the financial sector preferred salaried employees when issuing loans.
Lebona advised that security measures must be tightened as there might be those with ulterior motives and who might seek to confiscate consumers’ assets.
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