The Bank of Ghana (BoG) is to collaborate closely with the World Bank and the International Finance Corporation (IFC) to enhance the output of the collateral registry to keep it in tandem with international best practices.
The Deputy Governor of the BoG, Dr Abdul Nashiru Issahaku, announced this at a symposium to mark the 5th anniversary of the Collateral Registry of Ghana.
The anniversary was on the theme: “The Borrowers and Lenders Act 2008 (ACT 773) and the Collateral Registry Ghana: The Success Story.”
The Collateral Registry, which was established by Parliament as the first of its kind in Africa, aims to promote transparency in the credit delivery system.
Dr Issahaku said prior to the setting up of the registry, the credit market was bedevilled with numerous problems which stifled easy access to credit by businesses, particularly, small and medium scale enterprises (SMEs).
But with its creation, he said, users could do research about certain assets and in case of defaults by a borrower, the programme assisted in speeding up foreclosure of collaterals.
He said there was a reduced risk of lending since lenders had collateral to fall on when a borrower defaulted in payment.
In the past, borrowers listed high interest rates, hidden charges, non-disclosure of pertinent information and unfair denial of access to credit as some of their challenges.
On the other hand, he noted that lenders expressed their concerns about high default rates, challenges in foreclosing collateral through the courts and the misapplication of funds on the part of borrowers.
Dr Issahaku said the registry had helped to clear many of those doubts and that “lending in general has become less risky and the enforcement of rights in security interest has significantly been enhanced”.
He said at the end of last year, 285 local and foreign institutions had so far accessed the registry and a total of 87,332 charges with 192,566 collaterals had been registered.
The registry, he said, had been very attractive to other central banks on the continent and had received delegations from several African countries who had visited the place to study the processes involved in its establishment.
He said African banks that had visited the registry included “the Central Banks of Liberia, Zambia, Uganda, Nigeria, Mozambique as well as the francophone Central Bank of West African States”.
The successes of the registry, notwithstanding, there are few challenges that are being addressed, notable among them being the duplication of registration and disjointed records.
The duplication of registration and disjointed records, he said, had been associated with the absence of harmonisation between the collateral registry and other registries such as the Company’s Registry, the Lands Commission and the Driver and Vehicle Licensing Authority (DVLA).
Mr Issahaku also cited non-compliance on the part of some lending institutions, in spite of several reminder notices as another challenge but added that the BoG had initiated actions through the central collateral registry and the banking supervision department to ensure strict compliance of the Act, (ACT 773).
On the challenge of the use of multiple or different borrower identity, he said as a short-term solution, the collateral registry system provided avenues for users to use various forms of identification for registration of charges and for conducting searches.
A Justice of the Appeals Court, Justice Gertrude Torkornoo, said some aspects of ACT 773 needed to be reviewed.
She said for instance that the aspect that dealt with familial relations created unnecessary defences and ought to be reconsidered.