Overview of Collateral Registry Implementation in Liberia
Amid macroeconomic challenges and a changing financial sector landscape, Liberia faced prior obstacles including a lack of legal framework and centralized registry for collateral. The Collateral Registry Implementation aimed to address these issues, enhancing the country's secured transaction regime and prospects for economic growth.
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Establishment and Operations of the Collateral Registry of Liberia Euphemia Gbadee Swen-Monmia Savannah, Georgia May 19, 2015
OUTLINE Macroeconomic Developments Liberia Financial Sector Landscape Challenges prior to a Secured Transaction Regime Collateral Registry Implementation Process Operations of Liberia's Collateral Registry Statistics of Liberia's Collateral Registry Strategy and Prospects of Liberia's Collateral Registry 2
MACROECONOMIC DEVELOPMENTS The Liberian economy recorded a decline in terms of growth from 8.7% at end 2013 to 0.3% in 2014 due to slowdown in the economy on account of the EBOLA pandemic. Projected growth for 2014 was 6.9%. The major sector contributing to the decline is the agriculture and fisheries sector. The growth rate projected for 2015 is negative 1.1%, thus indicating a reduction from 0.3% recorded in 2014, largely due to the prevailing health crisis being faced by the country. The economic condition of the country could experience a turnaround if the Government and its partners continue to curb the spread of EBOLA until Liberia is declared EBOLA free in 2015. 3
LIBERIAS FINANCIAL SECTOR LANDSCAPE There are nine (9) licensed and operating commercial banks in Liberia. One (1) of the commercial banks is specialized in microfinance lending and another is focused in agricultural lending. Commercial banks have 85 branches spread over 11 of the fifteen political subdivisions of the country. There are seven (7) Rural Community Finance Institutions (RCFIs); four of which are providing financial services in the four political subdivisions that have no commercial bank branch. There are twenty (20) licensed insurance companies with 30 branches and one hundred fifteen (115) registered forex bureaux operating in Liberia under the direct supervision of the CBL. 4
PRIOR CHALLENGES LIBERIA FACED Lack of Adequate Legal Framework (Law and fast track court) Collateral Taken by Financial Institutions (largely Immovable assets) Immovable collaterals were overly exposed (One property deed was used as collateral to secure several loans) No centralized real time online registry to register landed property that has been used as collateral to secure credit Movable assets alone were not option for securing loan because of the lack of experience in Assets Based Lending and the legal framework 5
COLLATERAL REGISTRY IMPLEMENTATION PROCESS 2 1 3 COMMUNICATIONS AND PUBLIC EDUCATION 6
LEGAL AND REGULATORY FRAMEWORK Commercial Code Revised in 2010 Chapter 5 on Secured Transactions; Sub-Chapter 5 on Registration of Security Interests Chapter 3A on Finance Leases; Sub-Chapter 5 on Registration of Interests Chapter 1 on General Provisions Establishment of the Commercial Court in 2010 Secured Transactions/Collateral Registry Regulation issued by the CBL in 2013 Schedule of fees issued by the Registrar Finance Lease for Bank Financial Institution Regulations issued by the CBL in 2011 7
LEGAL AND REGULATORY FRAMEWORK RIGHTS AND PROTECTION OF USERS: CREDITORS/ SECURED PARTIES DEBTORS CONSUMERS SEARCHERS REGULATORS AND POLICY MAKERS
INFORMATION REQUIRED FOR REGISTRATION Identification and address of the debtor Identification and address of the secured party Collateral description (generic or specific) Duration of registration Type of interest taken by the secured party Upload of documents are permissible but optional.
BUILDING OF AN ELECTRONIC SYSTEM Bsystem Ghana Limited was contracted to develop our electronic collateral registry system consistent with the revised Commercial Code of 2010 and the Secured Transaction and Collateral Registry Regulations issued by the Central Bank in 2013. The electronic system was completed and launched in June 2014. Offline version of the system was developed and installed on the Registry's in December 2014. 10
OPERATIONS OF THE REGISTRY Administrative structure of the Registry REGULATION AND SUPERVISION DEPARTMENT DIRECTOR DEPUTY DIRECTOR ASSISTANT DIRECTOR & REGISTRAR ASSISTANT REGISTRAR PULIC ACCESS SITES CAPACITY BUILDING & PUBLIC EDUCATION FINANCE CBL PUBLIC ACCESS SITE LIBA PUBLIC ACCESS SITE 12
Operations of the Registry The registry operates within the Regulation and Supervision Department of the Central Bank of Liberia. The Registry s function is Administrative. The Registry s staff can not add, change or delete any information in the financing statement registered in the system. Only secured parties and agents serve as registrant. Users can transact in the system as pre-paid and post- paid users. Fees are charged for registration and update of Financing Statement in the system and to get a certified search certificate. (Searches are free).
Operations of the Registry All fees are paid in Liberian Dollars, but amounts are dependent on the loan value. The table below displays the fees in United States Dollars for easy understanding. LOAN AMOUNT REGISTRATION FEES UPDATE FEES CERTIFIED SEARCH CERTIFICATE FEES US$3.00 </= US$7,000.00 US$2.00 US$1.00 US$7,001.00 US$50,000.00 > US$50,000.00 US$4.00 US$2.00 US$3.00 US$6.00 US$3.00 US$3.00 14
STATISTICS OF THE REGISTRY up to March 2015 SEARCHES CLIENTS 85 LEGAL ENTITIES 17 INDIVIDUALS 20 DEBTORS INDIVIDUALS 34 REGISTRATIONS SMALL FIRMS 6 NUMBER OF REGISTRATIONS 61 MEDIUM FIRMS LARGE FIRMS 12 VALUE OF REGISTRATIONS US$249,373,358.00 9
STATISTICS OF THE REGISTRY VALUE OF FINANCING STATEMENTS IN % % OF THE NUMBER OF REGISTRATION 11% 1% 17% 46% Jun.-Sept. 2014 Jun.-Sept. 2014 Oct.-Dec. 2014 43% Oct.-Dec. 2014 82% Jan.-Mar. 2015 Jan.-Mar. 2015 Relationship between # of Searches and Registration 50 40 Searches 30 Registration 20 10 0 Jun.-Sept. 2014 Oct.-Dec. 2014 Jan.-Mar. 2015
STRATEGY AND PROSPECTS OF THE REGISTRY Partnership with private sector players, like the Liberian Business Association; Capacity building for key stakeholders; Continuous public education and public awareness. Establish public access sites in leeward counties. Two (2) counties are expected to have public access in 2015.
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