CBK sees digital registry lifting SMEs

Politics and policy

Prof Njuguna Ndung’u, the Central Bank of Kenya governor, during the digital registry initiative briefing in Nairobi Oct 23. PHOTO | DIANA NGILA 

By GEOFFREY IRUNGU

In Summary

• Central Bank governor says move will give lenders track record of borrowers and ease access to loans.

Central Bank of Kenya (CBK) expects small businesses to have better access to credit with the coming of digital registration of all citizens, governor Njuguna Ndung’u said on Thursday.

The new identification system will record details of individuals and companies including assets, liabilities and track records with utility providers.

It involves people and firms being issued with cards holding the information, paving way for lenders to allow faster and cheaper access to loans for small and medium enterprises (SME).

Credit reference bureaus will easily be able to identity and give credit scores to citizens as they will access their track, financial and asset records from a single data base following the introduction of the digitised registry.

“Of importance is the ease of access to credit. A central repository of personal and corporate information will facilitate banks in their credit risk appraisal,” said Prof Ndung’u.

SMEs and individuals have found it difficult to access credit because of lacking a credit history showing capacity to pay back, with banks tending to favour doing business with large corporates.

Prof Ndung’u noted that administrative cost involved in searching for the relevant information has been a key driver of costly credit.

The governor spoke during the launch of the digital registry initiative at the Nairobi’s Serena Hotel. Banking institutions will from January 1, 2016 only deal with those who carry the new cards.

The registry is set to reduce the incidence of unclaimed assets, reported to be over Sh200 billion.

A new embedded database will contain information of the location of individual assets and contact details of beneficiaries.

Cards will also capture information in the national ID, PIN, passport, driving licence, birth certificate, and residence, among others.

“What is being done is simplifying and centralising identification at one point. Today we would not be talking about unclaimed assets if this digital registry and card existed,” said James Murigu, the chairman of Metropol Credit Reference Bureau.

Appeal to the public

Mr Murigu, a former Nairobi Securities Exchange broker, said the registry will make it possible to trace precise locations of asset owners.

In the past some families have been compelled to appeal to the public for such information through newspaper ads. The biometric registration is set to start in February and end by December 2015.