President Ruto Pushes For Credit Scores In Bid To End CRB Blacklisting

 

President William Ruto at Norfolk Hotel in Nairobi County during a briefing by Safaricom, NCBA Bank and Kenya Commercial Bank. PHOTO| PSC

By Kepha Muiruri

President William Ruto has backed the assigning of credit scores to borrowers in a push to end the blacklisting of borrowers by Credit Reference Bureaus (CRBs).

The call by the new President adds impetus to the ongoing reforms of credit information sharing (CIS) as the government seeks to end the negative connotation which links CRBs to negative information sharing.

“Instead of saying you are in or out, we should have a credit scoring mechanism so we can have a graduated list from the least to the best so that everybody can have a chance even if you are somewhere at the bottom. You can always walk your way up as you learn the ropes,” President Ruto said on Wednesday.

“What we are asking is we don’t want credit listing to be an all-or-nothing, in-and-out engagement. We want credit listing to be a facility that gives everybody a chance to be their best in their own time.”

During his inauguration speech on September 13, President Ruto had indicated that his government would initiate reforms to the operations of CRBs in a bid to better credit access to the more than 14 million persons listed with the credit bureaus.

According to President Ruto, the review of the CRB listing mechanism will open the door to credit for up to four million people.

“This will now redeem close to four million Kenyans by the beginning of November. When you are blacklisted, you are told you are not a very good person. This has caused a great loss to many people with some missing out on jobs in addition to exclusion from formal borrowing.”

The Central Bank of Kenya (CBK) has been stewarding reforms to credit information sharing including the operations of CRBs.

Despite his hard stance on CRBs throughout the campaign trail and in his first weeks in office, President William Ruto said he was not against the role played by the bureaus.

“It’s not in our position that we are against CRBs. Our position is that we should change the model of listing so that we do not make it an all-or-nothing affair, unfairly disadvantaging borrowers,” added President Ruto.

Under a credit scoring mechanism, borrowers are assigned specific scores based on their creditworthiness with a higher score indicative of higher chances for the customer to meet his or her credit payments.

In the US, the credit score number ranges from 300 to 850 and is based on credit history including the number of open accounts, total levels of debt and repayment history.

In October last year, then President Uhuru Kenyatta ordered a freeze on CRB listing for borrowers with outstanding amounts below Ksh.5 million from October 2020 until September 30 this year.

Such borrowers would not have their listings incorporated in credit reports.

The freeze on listing was geared at supporting credit access to micro, small and medium enterprises (MSMEs).