Collateral-Related Challenges Associated with the Use of Advance Payment Guarantees (APG) in Southeastern Nigeria

This study analyzed the collateral-related obstacles limiting contractors’ access to Advance Payment Guarantees (APGs) in Southeastern Nigeria, where strict collateral requirements and administrative delays continue to hinder effective project mobilization. The major problem identified is the excessive demand for cash-backed collateral, which excludes many small and medium-sized contractors from public procurement opportunities. A mixed-method approach was adopted, using data from 500 participants across the five Southeastern states. Quantitative data were processed using descriptive statistics, while thematic analysis captured key qualitative insights. Figure 2 revealed that cash collateral accounted for 42% of APG requirements, followed by fixed-asset collateral at 35%, while insurance-backed guarantees remained low at 12%, showing limited diversification. Results showed that collateral rigidity, bureaucratic processing delays, and inconsistent banking policies significantly restrict access to APGs. These constraints contribute to project delays, increased costs, and exclusion of capable local contractors. The study recommends adopting flexible collateral models such as insurance-backed APGs, enforcing standardized APG policies across financial institutions, digitizing APG issuance workflows, and improving regulatory oversight to reduce delays and promote financial inclusion.