Politicians top credit bureau loan queries

The Central Bank of Kenya. FILE PHOTO | NMG 

Politicians angling for elective posts in last year’s General Election pushed up the number of customers querying their loan repayment compliance status from credit reference bureaus (CRBs) by 56 per cent.

Central Bank of Kenya (CBK) data shows that the number of customers who visited Transunion, Metropol and Creditinfo -- the only three licensed aggregators of consumer credit history -- grew from 84,412 in 2016 to 131,587 in 2017.

“The requests for credit reports by customers increased by 56 per cent during the election year (2017), partly fuelled by demand for CRB clearance certificates as a requirement for eligibility to contest for various political posts,” says CBK in its annual banking sector report released last week.

The 2017 year-on-year growth in the number of customers seeking to know their credit histories was faster compared to the 2015-2016 period when it grew by just 12 per cent.

A further breakdown of the data into monthly credit report requests by banks to the three CRBs shows that July had the highest requests, being the month before the August 8 elections.

According to the interim political parties and independent candidate summary shared on the Independent Electoral Boundaries Commission (IEBC) website in May last year, a total of 15,082 candidates vied for the 2017 elections.

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Credit repayment history

The number of those who went for CRB reports may have been higher than the final candidates given that the ruling party Jubilee attracted 8,012 aspirants during nominations, for instance.

As part of political parties’ clearance procedures to satisfy the integrity test, reports on credit repayment histories were factored in.

The CBK data shows that the use of credit reports for credit appraisal by commercial banks and microfinance banks registered a decline of 10 per cent from 4.9 million in 2016 to 4.4 million, “indicating that the demand for credit was low during the year due to the long electioneering period and the credit squeeze by banks following enactment of the interest rate caps in September 2016.”

In December only 272,206 requests were made, being 38 per cent lower than the July number.

The credit information sharing (CIS) mechanism has gained increased acceptance as an integral component of the credit market in Kenya since its rollout in July 2010.

As at end of December, the CBK had approved 1,434 third-party data providers compared to the 797 approved in the year 2016.

The majority of the third-party data sources approved comprised saccos, according to the CBK.

However, there has been a sustained outcry in the market that banks are not using CRB reports to reward customers, with good credit scores a lower price on their loans.