The Defects of Nigeria’s Secured Transactions in Movable Assets Act 2017 and Their Potential Repercussions on Access to Credit: a Comparative Analysis and Lessons from the Anglo-American Law

It has been sufficiently established in law and finance literature that an effective legal framework that governs non-possessory security transactions is a key component in the realization of financial inclusion and affordable access to credit in market economies. Recently, the Nigerian lawmakers enacted the Secured Transactions in Movable Assets Act 2017 (STMA), which was modelled after the United States’ Article 9 of the Uniform Commercial Code (UCC Article 9) and its unitary-functional approach to security interests. Arguably, some of the STMA’s provisions are defective: they do not reflect the local conditions in Nigeria and are likely to frustrate its section 1 aim of broadening access to credit for individuals and small businesses. The STMA recognizes registration as the main method of perfection: yet there are multiple but unlinked movable collateral registries in Nigeria which ultimately constitute a breeding ground for secret liens. This article argues that the relegation of other perfection methods, such as ‘possession’ and ‘control’, will diminish the economic success of the reformed law. It calls for a reconsideration of the rules governing publicity and the perfection of security interests under the STMA with insights and lessons from the UCC Article 9 and its underlying case law.