Security registry critical for SMEs growth—World Bank
The World Bank has described the personal property security registry system (PPSRS) of Malawi as key to alleviating poverty among small and medium enterprises (SMEs).
The Bretton Wood institution’s global specialist for the secured transactions and collateral registries Elaine MacEachern said this on Friday in Blantyre at the end of a two-day study tour of the PPSRS in Malawi by delegates from Ethiopia, Kenya and Zambia.
Malawi became the fourth country in Africa after Ghana, Liberia and Nigeria to pioneer the security transaction reforms.
MacEachern said one of the reasons the World Bank introduced this project was to address access to finance for SMEs through the collateral registry.
She said: “This comes back to the World Bank twin goals of poverty alleviation through secure transaction business reforms. These reforms are designed to target SMEs because they are the backbone of every economy across the world.
“Those SMEs need to have access to finance to grow their businesses, buy new plant and machinery and hire more people and basically to export.”
MacEachern said since the system rolled out in November 2015, about 29 financial institutions have registered with the registry system, a development she said is encouraging.
However, she said commercial banks are yet to fully embrace this new way of lending specifically on how the new legal framework works.
“When you look at the banks’ portfolio, particularly in North America and more developed countries using movable property, the rate is somewhere between 68 and 72 percent.
“But if you look at the bank’s portfolio in Africa, it is the complete reverse, 25 percent is based on movable property while 72 percent is for unmovable property,” she said.
In his remarks, Registrar General Chapusa Phiri said PPSRS is one of the key reforms by the Malawi government and through them, his office will ensure that the financial system embraces the initiative for the benefit of SMEs.
PPSRS of Malawi is an online collateral registry that allows financial service providers to register security interests in movable assets such as vehicles, machinery, livestock and inventory, thereby facilitating lending to individuals, farmers and SMEs.
The registry became operational in November 2015.
