NATIONAL NEWS
MONROVIA – The Central Bank of Liberia and the Banking Institute of Liberia have begun a specialized training program aimed at strengthening the capacity of banks and other financial institutions to use Liberia’s newly enhanced collateral registry system and expand access to credit.
By: Trokon S. Wrepue – trokon1992seokin@gmail.com
The training, which focuses on Movable Asset Financing and Credit Infrastructure, has brought together approximately 35 participants, including loan officers, credit officers and portfolio managers from commercial banks and non-bank financial institutions.
The initiative follows the recent launch of Liberia’s enhanced collateral registry system by the Central Bank, a platform expected to improve transparency in lending, reduce risks associated with multiple pledging of assets and make it easier for businesses and individuals to access financing.
CBL: New System Will Strengthen Transparency in Lending
Speaking during the training, Fonsia Mohameh Donzo, Senior Advisor to the Executive Governor on Regulatory and Supervisory Affairs at the Central Bank of Liberia, said the training is intended to ensure that financial institutions understand both the operation of the new system and the regulations governing its use.
She explained that financial institutions are now required to register assets pledged as collateral through the collateral registry.
According to Donzo, the current system is an enhancement of an earlier collateral registry introduced around 2013 or 2014, which primarily covered movable assets.
The enhanced system now provides for the registration of both movable and immovable assets, including vehicles, computers, phones, inventories, receivables, salaries, land, buildings and other fixed assets.
“This system is mandatory,” Donzo said, stressing that financial institutions must register assets pledged to them as collateral.
System Designed to Stop Multiple Use of the Same Asset
Donzo said one of the major benefits of the registry is that it will allow financial institutions to make lending decisions based on reliable information about assets being offered as collateral.
She said banks will be able to determine whether an asset exists, establish its value and determine whether another financial institution already has a lien on it.
The system, she noted, is expected to address situations in which borrowers use the same property or asset to secure loans from multiple financial institutions.
“This system is going to provide greater transparency,” Donzo explained, adding that it will give financial institutions greater confidence that assets being pledged are genuine, have value and are not already encumbered.
She cautioned, however, that the collateral registry will not replace the normal credit assessment process conducted by banks.
Instead, she said, the registry will complement loan underwriting by requiring financial institutions to consider a borrower’s repayment capacity, cash flow, credibility and creditworthiness alongside information obtained from the collateral registry.
‘A Win-Win’ for Banks, Borrowers and Depositors
Donzo said the system is also designed to protect depositors, whose funds constitute a major source of financing used by banks to provide loans.
She explained that because banks lend money largely from deposits belonging to ordinary citizens and businesses, the Central Bank has a responsibility to ensure that financial institutions operate safely and have mechanisms to reduce lending risks.
The registry, she said, will help protect the interests of banks, depositors and borrowers.
For borrowers, Donzo said verified collateral could increase lenders’ confidence and potentially contribute to more favorable borrowing conditions, particularly where the borrower also demonstrates strong creditworthiness.
“This system is a win-win for everyone,” she said.
Public to Gain Direct Access to Collateral Information
The Central Bank official also disclosed plans for a massive public awareness campaign to educate borrowers, businesses and ordinary citizens about the new system.
She said the collateral registry is not only for banks and financial institutions, but is also designed as a public information platform.
According to Donzo, members of the public will be able to conduct searches before purchasing assets such as second-hand vehicles or property to determine whether those assets have previously been pledged as collateral.
She cited an example involving a person who was preparing to purchase a property from an owner who had reportedly been experiencing financial difficulties.
A check conducted with the Central Bank established that the property had already been pledged to a bank as collateral.
Had the buyer proceeded without conducting the check, Donzo said, the individual could have faced a legal dispute with the bank because the lender held the original property documents.
Instead, the parties were able to resolve the matter by using proceeds from the sale to settle the outstanding bank obligation before the remaining funds were given to the property owner.
Donzo said the new system will make such searches easier because people will not have to physically visit the Central Bank.
They will be able to access the system remotely, pay the applicable fees and conduct searches from the comfort of their homes or offices.
National Identification, Land and Traffic Systems to Be Linked
Donzo further disclosed that the collateral registry has been designed to connect with other government information systems to strengthen verification and reduce fraud.
She said the system has the capability to link with Liberia’s National Identification Registry, allowing individuals to be uniquely identified when assets are registered or pledged.
The system is also expected to connect with the land registry once the land records become digitized.
Additionally, Donzo said plans are underway for connectivity with the traffic management system to help verify information relating to vehicles and other relevant assets.
She said these linkages will help ensure that individuals cannot pledge or sell assets they do not legitimately own.
Banking Institute: Movable Assets Will Open New Doors for Borrowers
For Assistant Professor Richard S. Panto, Director General of the Banking Institute of Liberia, the training is an important response to changes taking place in Liberia’s financial sector.
Panto said the approximately 35 participants are being trained to understand how movable assets can be used as instruments for accessing credit.
He explained that traditionally, borrowers have largely been expected to provide land or buildings as collateral when seeking loans.
However, under the expanded framework, borrowers may be able to use assets such as laptops, inventories and accounts receivable to support loan applications.
“You don’t necessarily need a land or a house,” Panto said, noting that the new approach could provide additional financing opportunities for individuals and businesses.
SMEs Expected to Benefit
Panto said small and medium-sized enterprises are among those expected to benefit significantly from the new system.
He noted that many small businesses lack the traditional collateral required by banks but possess other assets that could potentially be used to access financing.
He said easing collateral requirements could help address some of the constraints businesses face when seeking credit.
According to Panto, greater access to finance could enable small and medium-sized enterprises to expand their operations, employ more workers and contribute more significantly to economic activity.
“When they make money, they will improve their business. And through that process, they will hire more people,” he said.
Banking Institute Highlights Skills Development
Panto also highlighted the Banking Institute of Liberia’s contribution to developing professional skills within the country’s financial sector.
He said the institute has trained approximately 1,500 candidates in different areas of banking, with many graduates now occupying important positions in the financial sector.
He also disclosed that the institute has produced three Liberian chartered bankers through its collaboration with the Chartered Institute of Bankers of Nigeria.
Panto said the institute’s training programs are designed both to prepare new graduates for employment and to help existing financial-sector workers advance professionally.
Panto said the World Bank is also playing an important role in supporting the development of Liberia’s collateral registry and other economic development initiatives.
He described the World Bank as a longstanding partner in Liberia’s development efforts and said its support is contributing to reforms intended to strengthen the financial sector.
Public Awareness Campaign Planned
Both officials emphasized that the success of the collateral registry will depend not only on financial institutions but also on borrowers and the general public understanding how the system works.
Panto said plans are underway to engage citizens and business owners through sensitization and public education.
Donzo said the Central Bank has already begun using radio talk shows and other public information channels to explain the system, with additional flyers and awareness activities expected.
She urged the public to take advantage of the information available through the registry, particularly when purchasing property or other valuable assets.
A Step Toward Safer and More Accessible Credit
The launch of the enhanced collateral registry and the accompanying training represent a broader effort to reform Liberia’s credit infrastructure.
By allowing a wider range of assets to be used as collateral, improving access to information and helping lenders identify existing claims on assets, the system is expected to reduce lending risks while expanding opportunities for borrowers.
The initiative also seeks to tackle the longstanding practice of “double-dipping,” in which a borrower uses the same asset to secure loans from more than one financial institution.
With the registry providing a centralized mechanism for tracking pledged assets, officials believe such practices can be significantly reduced.
As Liberia works to expand access to finance, particularly for small and medium-sized businesses, the Central Bank and the Banking Institute say the new system could become an important tool for building confidence between lenders and borrowers and strengthening the country’s financial sector.
