Info sharing goes regional as credit bureaus cross borders

Central Bank of Kenya Governor Prof Njuguna Ndung’u (centre) with Metropol Credit Reference Bureau MD Sam Omukoko (left) and Kenya Bankers Association CEO Habil Olaka at a Metropol corporate function in Nairobi on July 24 last year. PHOTO | FILE 

By James Anyanzwa

In Summary

• Move is expected to help control the level of credit risk among commercial banks and ensure stability of the financial systeminShare

Loan defaulters in East Africa could soon have nowhere to hide as credit reference bureaus move to open outlets across the region.

Cross-border credit information sharing has been in the pipeline for more than three years.

The increased presence of CRBs in the East African Community states is expected to help control the level of credit risk among commercial banks and ensure stability of the financial system. It will also help to promote financial inclusion by bringing more people into the formal banking system.

But even as the CRBs criss-cross each other across the borders, policymakers are still working on ways of harmonising credit information sharing principles around the region.

READ: Banks in plan to share credit information

Creditinfo, which has operations in Tanzania, is looking for investment opportunities in Kenya. The EastAfrican has learnt that the Icelandic credit bureau, which has a presence in 16 countries, has been granted approval to set up infrastructure and operate a bureau in Kenya subject to complying with statutory requirements.

Meanwhile, the Kenyan-owned Metropol Credit Reference Bureau Ltd is conducting feasibility studies in the Ugandan, Tanzanian and Rwandan markets with plans to set up subsidiaries there by the end of the year. Additionally, CRBAfrica Credit Reference Bureau operates in both Kenya and Rwanda.

“Creditinfo is coming; it has already been given the approval to establish a bureau in Kenya,” Jared Getenga, chief executive of the Association of Kenya Credit Providers (AKCP), told The EastAfrican. “If they meet the regulator’s requirements, they will be given a licence to operate.”

He added: “They also have operations in Tanzania.”

According to Mr Getenga, the presence of CRBs in any market is determined by the level of economic advancement of the country.

“As part of the harmonisation, Kenya has started sharing both positive and negative credit information on borrowers while Uganda and Tanzania have opened up their markets to competition,” said Mr Getenga.

CRBs were introduced in Kenya in 2009. This followed concerted efforts by the Central Bank of Kenya and commercial banks after the Banking (Credit Reference Bureau) Regulations 2008 became operational on February 2, 2009.

Since then, Kenya, East Africa’s largest economy, has licensed two bureaus — CRB Africa and Metropol Credit Reference Bureau Ltd. Tanzania, the region’s second largest economy, has two registered bureaus ­— Dun & Bradstreet Credit Bureau Tanzania Ltd and Creditinfo Tanzania.

Rwanda has so far registered one bureau — CRBAfrica Rwanda — while in 2012 the Bank of Uganda changed the law to open up the credit reference bureau market to other firms, ending the three-year monopoly granted to Compuscan Uganda in 2008. Burundi is still working towards registering a bureau.

The acceptance of cross-border information sharing on borrowers as part of regional integration is expected to help control the incidence of non-performing loans among the region’s commercial banks.