Collateralization of intangible assets making - a case for micro, small and medium enterprises in Kenya
Date
2020-11
Authors
Odhiambo, Eddy Ouma
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Kenya has seen regulatory reforms in the spirit of easing the cost of doing business by
overhauling various statutes regulating commerce. Some of these statutes considered
in this Thesis include the Companies Act, (Act No. 17 of 2015), Insolvency Act, (Act
No. 18 of 2015), the Moveable Property Security Rights Act, (Act No. 13 of 2017),
Banking Act, (Act No. 25 of 2016) and the Data Protection Act, (Act No. 24 of 2019).
This overhaul of statutes has elevated Kenya in keeping pace with the global
community, creating conducive environments for the modern credit market. The most
significant reform in these statutes is the recognition of intangibles as commodities of
trade.
From the preamble of the Moveable Property Security Rights Act, 2017 it is clear that
the statute addresses the mistrust between Micro Small and Medium Enterprises
(MSMEs) and formal financial institutions by creating a means of registering specific
security rights in moveable property.
However, despite the statutes being in place, there is need for a systemic shift towards
alternatives to tangible collateral just like the market driven acceptance of mobile
money. The similarities being that in both cases the collateral is intangible.
A digital registry solves the dilemma of possession which makes tangible securities
attractive by allowing identification, registration and publication of security rights so
as to give notice to any participant in the credit market. This is the missing link which
makes intangible collateral viable. In essence as secure digital registry unlocks credit
flow to the starving MSMEs if embraced by the credit market.
Description
A Thesis submitted in partial fulfillment of the requirements of the Degree of Master of Laws, at Strathmore University
Keywords
Regulatory reforms, Commerce, Statutes