Kenya’s President Uhuru Kenyatta has approved a law a Bill that allows low-income earners to use household goods, crops, live animals and even intellectual property to secure commercial loans, reports the Nation.
The Movable Property Security Rights Bill 2017 will increase the ability for ordinary Kenyans to access credit using movable assets.
Bank customers without the common costly forms of collateral such as motor vehicles (logbook) or land (title deed) will be able to access credit from banks through this law.
The new law establishes the office of the Registrar of security rights which provides for the registration of security rights in movable property and verifies the security offered.
The Registrar offers security rights that include deposit accounts and electronic securities, will be listed in the registry using a unique identification number that allows tracking of those that have been used to secure bank loans or collateral.
Lack of a central database that register the movable assets has kept banks from exploiting this option for long, but the introduction of the Registrar ensures that the financial institutions can log in and make a claim. The Registrar puts a stop to the ease of tranaffering the properties from one person to another without the bank’s knowledge.
A 2014 report by Financial Sector Deepening (FSD) Kenya said countries such as Mexico and Ghana have reported an increase in SME lending following the setting up of similar registries.