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.