CEU Electronic Theses and Dissertations, 2018
| Author | Kanu, Michael Imran |
|---|---|
| Title | Access to Credit and Personal Property Security Law Reform in Africa: Examining the Legal Framework in Sierra Leone with Comparative Perspectives from England and the United States |
| Summary | Personal property security law (PPSL) reform is underpinned by the robust claim that the unrestricted use of personal property as security for credit expands access to finance, and the expanded access to credit finance correspondingly stimulates economic growth. Access to finance is evaluated as a measure of obtaining credit with ease, cost-efficiency and transparency, especially in the taking and realization of the security interest in a collateral. Ideally, security interests in personal property ought to be created and enforced with maximum flexibility, predictability and optimal cost, devoid of delays and redundant formalities. In addition, there must exist appropriate risk mitigation and public notice safeguards for all the relevant parties, including other creditors, whether secured or unsecured, and interested third parties including the good faith purchaser. Accordingly, this research examines the continuing PPSL reforms in the Africa, with Sierra Leone as the case study. It evaluates the reformed legal framework, inclusive of the new Sierra Leone Borrowers and Lenders Act 2014 (BLA), in determining whether it supports the economic function of facilitating expanded access to credit finance. Prior to the enactment of the BLA, the fragmented, limiting and obsolete nature of the PPSL framework made the cost of credit prohibitively high, particularly so for small and mid-scale enterprises (SMEs). The BLA adopts the functional approach to personal property security with the aim of stimulating economic growth by expanding the collateral range and improving the public notice regime. This research, however, asserts that the BLA substantial deviates from the paradigm functional and unitary model, and is fraught with ‘legal inefficiency’, thereby leading to a defective framework. The analyses are focused on the substantial deviations: First, the Central Bank’s extended regulatory supervision and intrusion in the market, the restrictive definition of lenders and the economic implications of a banking oligopoly in the secured credit market. Second, the retention of old English law corporate charges, the floating security dilemma, and the place of the purchase money security interest (PMSI) in the new framework. Third, the existences and impact of the two parallel systems for secured credit in Sierra Leone, legal parallelism in the two-tier framework, one for banking and other licensed financial institutions and the other for non-banking creditors within the same legal order. The substantial deviations notwithstanding, this research further claims that the BLA also affords the opportunity for the use of hitherto new security devices which will support the economic function of facilitating access to credit, including; optimizing agricultural finance given the agrarian nature of the economy in Sierra Leone; receivables and inventory financing for SMEs growth; and title financing, owing to its economic advantages especially for consumer finance and unique treatment in insolvency. The research proposes a rethink of the reform in Sierra Leone with comparative perspectives from the England and the United States. Article 9 of the Uniform Commercial Code in the US is considered to be the paradigm functional framework, whilst English law forms the basis of the pre-reform PPSL formal approach to personal property security in Sierra Leone. This comparative approach is also suggestive of reshaping the reform in Sierra Leone through the theoretical lens of the law and development movement and legal transplant theory, given the influence of the international financial institutions (IFIs) in the global law reform movement. The reform in Sierra Leone presents a substantive case to evaluate the merits (or otherwise) of the law reformist agenda of the IFIs within the field of secured transactions law. |
| Supervisor | Tajti, Tibor |
| Department | Legal Studies PhD |
| Full text | https://www.etd.ceu.edu/2018/kanu_michael.pdf |
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