Moveable Assets as Collaterals

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Movable Property Security Right Proclamation No. 1147/2019

As part of the Ethiopian government’s initiative to ease the difficulty of doing business in the country, the government has passed new Secured Transactions Law referred to as – Movable Property Security Right Proclamation No. 1147/2019. This bill, which has been in effect since August 7, 2019, entails that moveable assets can be used as collateral from borrowers. This is intended to be a means of gaining capital for small and medium enterprises that previously couldn’t use moveable assets like cars, agricultural machinery and even agricultural products as collateral for expansion (start-up) of their respective businesses.

The introduction of the new bill is supported by the new directive number MCR/01/2020 on the Operationalization of the Ethiopian Movable Property Registry System. The directive paves the way to put forward a complete legal framework for secured comprehensive electronic registration regime for transactions that extends to the creation, publicity, and enforcement of the four functional equivalents to security interests in movable assets. The registry, which meets all international best practices, has been operational since February 27th, 2020 and allows all types of secured creditors to register, amend, and search the online registry system.

The legalization of this framework is to enable small and medium enterprises to build capital through moveable asset loans, stimulate business, give businesses financial flexibility, and spur economic growth through job creation and investment. Overall, the bill is expected to widen the chance to get loans for aspiring entrepreneurs and provide creditors an estimated better chance of loan payment in the long run.

1 Comment

  1. Kassahun Belay on

    The government (NBE) has to allocate separate fund to grab interests of those entrepreneurs with viable and feasible business ideas whereby entrepreneurs’ feasible business plans should be considered as bilateral.This is imperative approach and can spur the country economic growth as well.

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