DRAWBACKS AND LIMITATIONS OF THE SECURED TRANSACTIONS IN MOVABLE ASSETS ACT 2017

Abstract

The Secured Transactions in Movable Assets Act (STMAA 2017) of 2017 was enacted to enhance credit accessibility, particularly for micro, small, and medium enterprises (MSMEs), by facilitating the use of movable assets as collateral. Despite its potential to revolutionize secured transactions in Nigeria, the Act presents notable legal ambiguities that could hinder its effectiveness. This article critically analyzes the procedural uncertainties in STMAA 2017’s dispute resolution framework, particularly the lack of clarity regarding the interplay between arbitration, mediation, and traditional court proceedings. It further evaluates the risks associated with the enforcement of security interests, focusing on the potential misuse of law enforcement agencies and the vulnerabilities created by the mandatory notice period for repossession. Additionally, the paper explores the challenges judgment creditors face due to the Act’s prioritization of secured creditors and the implications of the statutory ousting of the Stamp Duties Act on the enforceability of security agreements. The article also assesses the unintended financial burdens imposed by the mandatory insurance requirement for security agreements, arguing that it could deter financial inclusion rather than promote it. To enhance the efficacy of STMAA 2017, legislative reforms are necessary to clarify dispute resolution procedures, establish stronger judicial oversight in enforcement, and ensure a fair balance between secured and judgment creditors.