Going by the assessed economic challenges and difficult credit system, a new proposal for the establishment of a collateral bank, estimated to worth N15 trillion has been advanced.
Besides, the coming of the institution has been projected to facilitate the needed finance for over 10 million businesses, which presently are suffering from lack of funding.
The Group Managing Director of CFL Group of Companies and an infrastructure development financier, Lai Omotola, who made the proposal, noted that the establishment of the bank has become necessary “to unlock access to capital for businesses and entrepreneurs in Nigeria.”
The advocacy was contained in a letter he addressed to President Muhammadu Buhari and the Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, on February 29.
The collateral bank, he said, “will be a collateral deposit bank, whereby the bank will collect all forms of collateral securities from properties, treasury bills, bonds, fixed deposits certificates and other forms of collateral and issue as bank guarantee on behalf of the borrower.”
He stated.it “is more like a collateral leasing. The benefits are to all parties. The borrower will able to get solid collateral securities, which will attract lower interest rate while the collateral owner can make additional income from the idle assets and the lender can be sure of collateral securities, ultimately eradicating the menace of cloned documents.”
In a two-page document he personally signed, the chief executive lamented diverse difficulties the lack of collateral securities had created for businesses, entrepreneurs and high-net-worth individuals in the country, which he said, had contributed “to our prevailing economic crisis.”
Omotola cited the case of various intervention funds that the CBN “has provided for different sectors of the economy and cases of thousands of individuals, who have beautiful business plans, but could not access capital to execute their business plan.
He thus stated.the need to provide collateral securities to access either the funds or business capital “has remained a huge challenge. This is not only for the intervention fund, but also the bank loan and other capital.”