“I bet to present for second reading a bill shortly entitled, Security Interest in Movable Property.” This was Prime Minister Hon. Phillip J. Pierre at the sitting of the House of Assembly on October 11th 2022.
The passage of the Security Interest in Movable Property Bill is intended to support Micro, Small, and Medium Enterprises and is a critical step towards a cohesive and inclusive system to promote access to finance and growth within the small business sector.
In his contribution to the bill at the sitting of Parliament, Hon. Dr. Ernest Hilaire stressed the importance of this novel piece of legislation particularly to the MSME sector.
“The seamstress who has four sewing machines can now use those machines as security to get a loan. That never existed before but it can now, Mr. Speaker.”
Sharma Mathurin is the economist with the National Competitiveness and Productivity Council Spearheading this reform.
“What I think is important and different about this new bill and this project is that it ensures that the proper structured and orderly, comprehensive legislative framework is established to guide those transactions. So the banks, credit unions, and other financial institutions must adhere to the administrative rules and guidelines and regulations contained within the provisions of the new bill.”
She pointed out that the Bill also calls for the establishment of an online Movable Property Collateral Registry. The Collateral registry is seen as a win-win mechanism for both debtors and creditors. This online centralized register of movable assets is only for assets that have been secured as collateral for loan financing.
“At present Saint Lucia does not have a registry of movable assets and so it adds further structure to those transactions as any banker or creditor will be able to undergo a search or register a claim within the collateral registry from any electronic device.”
Mathurin declared that Saint Lucia is the forerunner and pilot member state within the OECS to develop and draft this landmark piece of legislation.
“While many of the other countries are in the early stages of drafting and developing, Saint Lucia is at an advanced stage and so they’re looking to Saint Lucia as a good example and a model to follow from.”
The International Finance Corporation (IFC), the largest global development institution focused on the private sector in emerging markets, is also working closely with the Eastern Caribbean Central Bank to promote the adoption of a harmonized legal and institutional framework for secured transactions. This includes a regional web-based collateral registry for moveable assets for the Eastern Caribbean Currency Union (ECCU). As part of this effort, the ECCB and IFC propose the adoption of a uniform legislative model for secured transactions across the ECCU. The IFC will also work with the ECCB to review prudential guidelines on the use of movable assets as collateral.
“Small and medium-sized enterprises are a major source of employment and are essential for economic growth in Saint Lucia,” said Ronke-Amoni Ogunsulire, IFC’s Regional Manager for the Caribbean. “The project to build an online collateral registry, informed by international best practices, is designed to advance financial inclusion in the country and to help companies to grow and prosper.”
The Security Interest in Movable Property Bill is the culmination of years of work and numerous consultations with key stakeholders such as the Chamber of Commerce, Bankers Association, Bar Association, and Consumers Association.
“I think generally this is the type of reform work and project that any competitiveness council would endorse or get involved in as unleashing credit to the private sector gives them the opportunity to take up projects within their firms that decrease their overhead cost, increase their efficiencies, empower them to export to other regional and international countries. And, when you have a private sector of firms collectively working towards improving their competitiveness it does augur well for country competitiveness and this has the potential to propel your economic growth in the right direction while ensuring that the general economic wellbeing of the country is enhanced.” Mathurin stated.
The new law was spearheaded by the National Competitiveness & Productivity Council with technical advisory support from the International Finance Corporation and the World Bank Group.