Training on Movable Assets Lending

The Department of Registrar General (DRG) in the Ministry of Justice and Constitutional Affairs in conjunction with the World Bank Group conducted a Training on Movable Asset-Based Lending for Financial Institutions in Malawi. The training was held at Ryalls Hotel, Blantyre from 24 to 26 April, 2017. A training of trainers will then be conducted at the same venue on 27 April, 2017. The training was delivered by experts from the Commercial Finance Association (CFA) from the United States of America and the Department of Registrar General. It was attended by sixty (60) participants from eleven (11) banks, eight (8) microfinance institutions and the Reserve Bank of Malawi.

Participants were trained in movable asset finance and pertinent stages of companies’ working capital cycle to which it applies. They were also introduced to different techniques of financing that can be utilized. The training was highly interactive, with participants engaging in case studies to determine how they would approach financing in different scenarios, and simulations on how different Malawian industries can be financed in line with the different techniques and principles of movable asset-based lending.

Further, participants were walked through the registration process and utilization of the Malawi Personal Property Security Registry (PPSR, otherwise known as the Collateral Registry). The Collateral Registry became operational in November 2015 and was publicly launched in February 2016 under Doing Business Reforms that the Malawi Government is currently implementing through the Ministry of Industry, Trade and Tourism with support from the World Bank Group. The Registry has facilitated MK30.5 billion in lending to small and medium scale enterprises (SMEs) between January 2016 and March 2017. Malawi was the third African country after Ghana and Liberia which established best practice secured transactions regime and collateral registry.

Speaking at the conclusion of the training workshop, Mr. Bartol Letica, Senior Financial Sector Specialist emphasized that the training is part of the Department of Registrar General and World Bank Group’s commitment to provide support to financial institutions in Malawi, to foster the environment for movable collateral lending as a way to increase access to finance for SMEs in the country.

The Registrar General, Mr. Chapusa Phiri said: the strong attendance and excellent discussions during the three-day training demonstrate a high level of interest from financial institutions to explore opportunities for movable lending and leverage the best practice collateral registry that we are managing.

The participants indicated that they benefited greatly from the training. Some of the feedback was as follows:

Asset-based lending and factoring has the potential to improve the financial performance of MSMEs whilst enhancing the profitability of financial institutions, Mr. Richard Dimba, Credit Manager (SMEs and Agriculture) at Opportunity International Bank Malawi.

This training has been very useful. We’ve learnt a lot of new skills most specifically factoring and asset-based lending. Greenwing as a micro-finance institution gets approached by many SMEs looking to grow and these could be viable options for financing for them in a manner which may be more secure for us. These are financing methods that have the potential to add vaue to the company as well as the industry as a whole, Ms. Kondana Kamsesa, Accountant, Greenwing Capital.

Reverse factoring is an area of lending that should excite SMEs and would love to see banks in Malawi to do this type of lending so as to boost the SME sector that have the potential to be major suppliers of raw materials to big companies. I feel that this training will help my institution to go into this kind of lending, apart from asset based loans, Mr. Sam Kamkosi, Head of Credit, New Finance Bank

The training addressed the critical issue of challenges to lending to SMEs, who we all agree are essential for developing our economy, the borrowing base. The refresher on movable security projection and presentation on lending products on inventory and receivables has broadened my view of opportunities available for lending to SMEs, Mr. Sam Kayesera, Consultant (Asset Finance), National Bank of Malawi.

Going forward, the Department of Registrar General and the World Bank Group will continue working closely with financial institutions to promote financial access to SMEs and will also engage SMEs directly as part of these efforts.