WB survey: Kenya leads African peers in credit information sharing
Lewis Njoka and John Otini
Kenya is ranked first in Africa as regards sharing of credit information, a new survey by the World Bank shows. Kenya, Ivory Coast, Niger, Tanzania, Togo and Nigeria have the most robust credit information sharing systems on the continent.
The survey measures the quality of credit information in a region or country based on coverage.
Coverage is defined as the number of records in the bureau or registry divided by the country’s adult population.
In addition to coverage, there is the Credit Information Index which measures credit information availability in a country based on the eight key factors such as availability of both positive and negative credit information.
Jared Getenga, Chief Executive Officer, Credit Information Sharing Association of Kenya (CIS Kenya) noted that a robust credit infrastructure is key to solving some of the perennial financial sector challenges such as high cost of credit and financial insolvency.
“A strong credit infrastructure will enable efficient and effective access to finance, financial stability and socially responsible economic growth through credit reporting, secured transactions and collateral registries and insolvency and debt resolution,” he said during the opening ceremony of the 5th Africa Credit Information Sharing Conference in Nairobi yesterday.
Sheila Mbijiwe, Deputy Governor, Central Bank of Kenya, reiterated the importance of a stable and inclusive financial sector for economic development of a country.
She said to achieve transformation and economic growth, there is a need to have sound financial systems that build and connect savings to investments.
“This will create opportunities for scaling up financial inclusion through ease of credit access and resolution of debt,” Mbijiwe added.
She said some banks were yet to align operations to risk-based lending, a factor that has seen interest rates in Kenya remain high, compared to countries such as South Africa which is at about four per cent.
Risk based-lending refers to the practice of giving different interest rates and loan terms to different consumers based on an individual’s creditworthiness.