SECURED CREDIT TRANSACTIONS UNDER THE NIGERIAN LEGAL SYSTEM: ISSUES AND CHALLENGES

Abstract

This paper examined the meaning, nature and operation of secured credit transactions in Nigeria. It discussed the reason why secured credit transaction has failed to achieve its central economic purpose of expanding access to credit. It explained the various forms of secured credit in Nigeria, distinguishing secured credit from unsecured credit which depends largely on creditworthiness rather than collateral. The paper further analysed the nature of collateral used in secured lending, focusing on movable assets under the Secured Transactions in Movable Assets Act 2017 (STMA Act), immovable assets regulated largely by the Land Use Act 1978 and conveyancing statutes and intangible assets such as intellectual property and receivables. It identifies the major barriers militating against effective secured transactions, namely fragmented and outdated laws, conflicting registration and priority rules, judicial delay, corruption in enforcement, weak institutional capacity, adverse macroeconomic conditions and socio cultural constraints affecting property rights and credit inclusion. It was submitted that Nigeria’s secured credit problem is primarily one of enforcement and coordination rather than asset scarcity. Amongst other things, the paper recommended that the National Assembly should enact a consolidated secured transactions statute that repeals the Bills of Sale Act, the Pawnbrokers Law and the Money Lenders Law, and integrates the STMA Act 2017 with the relevant provisions of CAMA 2020 under one coherent framework.