PROMOTING CHATTEL MORTGAGES IN NIGERIA THROUGH THE SECURED TRANSACTIONS IN MOVABLE ASSETS (STMA)ACT 2017

Abstract

Mortgages remain credible tools of economic growth for businesses and invariably for
personal, group and national wealth. Various businesses especially the small, micro and
medium scale enterprises face the challenge of insufficient credit for actualization of their set
organisational goals hence the need to source credit facilities outside their enterprises not only
to continue in business but to increase the viability of their businesses for effective competition
in both local and global markets. This article considered the necessity of chattel mortgages in
boosting the economy of Nigeria and ensuring greater financial inclusion. It particularly
examined how the Secured Transactions in Movable Assets (STMA) Act 2017 through its
provisions encourage micro, small and medium- scaled enterprises in Nigeria by promoting
chattel mortgages. It went further to examine chattel mortgages in other jurisdictions and
challenges facing the chattel mortgages in Nigeria. The article found that chattel mortgages
make it easier for small indigenous businesses who may not have real property which is more
acceptable to financial institutions as collateral because of its nature of durability, accessibility
for enforcement and continuous increase in value, to depend on personal properties such as
their goods, machines and inflow accounts to attract additional credit to grow their businesses.
The article discovered some challenges to chattel mortgages in Nigeria which discourage
lenders especially Banks and other financial institutions from advancing credit to business
organisations on the reliance of their goods as collateral; preferring and insisting on landed
property as security for loans advanced. The article also highlighted some provisions of the
STMA Act 2017 that make enforcement of chattel mortgages difficult and cumbersome and
therefore suggested areas of reform of the STMA Act, new executive policies and guidelines to
guide the registration of collaterals in the collateral registry amongst others to encourage
chattel mortgages in Nigeria.