Treasury to evaluate impact of credit data sharing

February 23, 2016
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Treasury Cabinet Secretary Henry Rotich says the sharing must make credit more affordable especially to low risk borrowers/FILE
Treasury Cabinet Secretary Henry Rotich says the sharing must make credit more affordable especially to low risk borrowers/FILE
NAIROBI, Kenya, Feb 23 – The National Treasury is set to evaluate the impact Credit Information Sharing (CIS) has had in the market over the last two years.

Kenya has been sharing full file data, meaning customers’ positive and negative repayment information is shared to the Credit Reference Bureaus for the last two years.

Treasury Cabinet Secretary Henry Rotich says the sharing must make credit more affordable especially to low risk borrowers.

“This transformation in pricing must begin with granting preferential rates to the customers of small amounts of credit granted through the mobile phone, who have shown consistent history of prompt repayment. I am interested to know how quick wins can be achieved in this segment of the public borrowing that has grown significantly,” Rotich said.

He says the government continues to be concerned by the high rates that have continued to characterise Kenya’s financial sector.

“We must also continue to explore further expansion of the CIS regime to a broader range of credit providers. A team of consultants that the National Treasury has been engaged to prepare a broader Financial Services Authority Bill has been mandated to address this very in terms of reference,” he added.

Rotich was speaking during the opening of the third regional credit information sharing conference on Tuesday.

“We are also seeking to look at how quickly a credit score changes once a borrower has defaulted or began paying their credit as well as expanding the source of credit information,” said Central Bank of Kenya Governor Patrick Njoroge.

According to the 2016 FinAccess household survey released last week, about 75.5 percent of Kenyans hold formal accounts up from 26.7 percent in the year 2006.

The report states that 32 percent of Kenyans prefer digital banking services as their most important financial instrument.

“Products like KCB M-PESA, Mshwari and Equitel have created an access to credit to individuals who could not measure up to the lenders criteria which often demanded tangible collateral and regular income, owing to credit information sharing the lenders in Kenya now use reputable collateral from the Credit Reference Bureaus to formulate products for this low income but high potential group,” said Credit Information Sharing Association CEO Jared Getenga.

Getenga says there are about four million records at CRB of people with credit with over 350 credit providers. Of the four million about 95 percent is positive credit.

According to the 2016 Ease of Doing Business World Bank report, Kenya is ranked third in Africa and 28th in the world.

The third Regional CIS Conference, theme is – “CIS for Innovation and Financial Inclusion – Mikopo Kisasa!” Translated from Swahili, “Mikopo Kisasa” means “Contemporary Lending Approaches”.

The two-day conference is hosting about 300 delegates representing various segments of credit markets from the EAC Region and beyond.

The event will be followed by the Nairobi Business Community Summit, on February 25-26, 2016 providing half day sensitisation on CIS to 400 bank staff and credit consumers respectively on each day.

The events will be facilitated by renowned global experts who will share insights on fundamental aspects of CIS that stand vital in managing credit risk.

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