Transcript Credit Reporting Trends in Africa

THE 2ND EAST AFRICAN COMMUNITY REGIONAL CREDIT
INFORMATION SHARING CONFERENCE
Sub Saharan Africa Credit Bureau Program
Access to Finance Advisory Services
Nairobi, September 2013
Moyo Violet Ndonde & Agata Szydlowska
Credit Reporting Trends
 Introduction –
Global Credit Reporting Program
 Global Trends within Credit Bureau Industry –
Recent Developments
 Africa “Decade of Change” –
Impact on credit bureau trends
IFC’s Global Credit Bureau Program - Projects
Starting from 2005 IFC & World Bank focused on establishing Credit Bureaus
worldwide. Why?
Latin America &
Caribbean
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Argentina
Barbados
Chile
Guyana
Jamaica
OECS (**)
Trinidad & T
Eastern Europe &
Central Asia
Sub – Saharan
Africa
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Azerbaijan
Kyrgyzstan
Tajikistan
Uzbekistan
Mongolia
Moldova,
Kossovo
Cape Verde
DRC
Ethiopia
Ghana
Mauritius
Mozambique
Nigeria
Rwanda
Senegal
Tanzania
UEMOA (*)
CEMAC (***)
(*) Western Africa Economic and Monetary Union - 8 countries
(**) Organization of Eastern Caribbean States - 7 countries
(***) Central Africa Economic and Monetary Union – 6 countries
Middle East &
North Africa
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Afghanistan
Algeria
Djibouti
Egypt
Jordan
Lebanon
Libya
Iraq
Morocco
Oman
Palestine
Syria
Tunisia
U.A.E.
Yemen
Asia & Pacific
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Bangladesh
Cambodia
India
Lao
Nepal
Pacific
Islands
In developing countries, almost 2/3 of the
population do not have access to finance
Direct Correlation between Lack of PCBs and Low
Access to Credit!
• Countries without Private
Credit Bureau (PCB) are the
same ones, where acces to
credit is most difficult,
limited and bureaucratic!
•Afrcica Region remains with
the lowest coverage of credit
bureaus (lowest access to
credit), especially the Sub
Saharan Africa
Global Trends – International Coverage Expanding
Source: Doing Business 2011
Credit Bureau Coverage Across Regions
Average Private Bureau Coverage (% of adults)
1. LAC continues to
lead, being the
second strongest
region after OECD
in the extent of
credit bureau
coverage
67.4
OECD
33.8
Latin America & Caribbean
29.8
Europe & Central Asia
19.2
East Asia & Pacific
2. Sub-Saharan
9.3
Middle East & North Africa
South Asia
6.4
Africa has the
lowest coverage
Sub-Saharan Africa
5.6
3. MENA significantly
0
10
20
30
40
50
Percent of Adults
Source: Doing Business 2013
60
70
80
improved over the
past 8 years
What has changed in 8 years? A glance at state of
coverage of credit bureaus
Average Credit Bureau Coverage (% of adults)
59
OECD
67.4
31.2
33.8
Latin America & Caribbean
6.6
Europe & Central Asia
29.8
9.6
East Asia & Pacific
1.7
Middle East & North Africa
0.6
South Asia
19.2
2005
2013
9.3
6.4
3.5
Sub-Saharan Africa
5.6
0
10
20
30
40
50
60
70
80
Percent of Adults
ECA, EAP and MENA are big reformers demonstrating significant leaps in improving the
coverage of private credit bureaus
Source: Doing Business 2013
Regional Comparisons for Credit Information Index
similar to OECD, ECA leads
Credit Information Index
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ECA is the best performer out of all
emerging market regions
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MENA is ahead of LAC, which
demonstrates the big progress in
reforms in MENA region for the past
years
6.0
5.0
•
5.0
Credit Information Index(max=6)
5.0
Components of the
Credit Information Index
EAP and SSA lag significantly behind as
the lowest performer in credit
information sharing market
4.0
4.0
3.0
3.0
3.0
2.0
2.0
2.0
1.0
0.0
High Income Europe &
Latin
Middle East South Asia
OECD
Central Asia America &
& North
Caribbean
Africa
Source: Doing Business 2013
East Asia & Sub-Saharan
Pacific
Africa
• Both firms and individuals
are listed
• Both positive and negative
information
• Retailers and/or utilities
submit data
• 5 or more years of
historical data
• All loans included above 1%
GNI per capita
• Consumer right to inspect
is guaranteed by law
What has changed in 8 years? A glance at the state of
credit information sharing across regions
Credit Information Index: 2005 vs. 2013
6.0
Credit Information Index
5.0 5.0
5.0
5.0
4.5
4.0
4.0
3.0
3.0
3.0
2013
2.5
2.0
2.0
1.8
2.0
1.8
2005
2.0
1.5
1.0
0.0
High Income
OECD
Europe & Central Latin America &
Asia
Caribbean
Middle East &
North Africa
South Asia
East Asia & Pacific
Sub-Saharan
Africa
Sub – Saharan Africa and East Asia & Pacific have made small progress on improving the credit
information index. Europe & Central Asia and MENA are the regions with the biggest progress over
the past years. At the same time there is a slight decline rate in LAC region.
Source: Doing Business 2013
Global Trends – practical terms
 Positive & Negative Data Sharing (mandatory)
 Increase of MFI & SME sector contribution
 Alternative Data Inclusion in credit reporting
( company registry data, utility companies, mobile
phone providers, retailers)
 Increase Supervision & Governance focus –
Responsible Finance approach as a consequence
of Global Crisis in Western World.
% of CBs receiving information from each source
Contributors of Data to Credit Bureaus
100%
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Over 50% of bureaus reportedly receive information from MFIs
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Data quality and coverage of the MFI market remains an issue, as most bureaus capture
only data from regulated MFIs (if any)
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More PCBs started to get information from additional sources, like employers, statistic
agencies, ID , bankruptcy agencies
91%
90%
83%
80%
75%
72%
67%
70%
61%
60%
50%
50%
50%
51%
45%
43%
40%
30%
30%
29%
19%
20%
12%
10%
0%
Private
Commercial
Banks (105)
Public
Development
Credit
Finance Corps Credit Card
Commercial
Banks (99) Union/Coops
(109)
Issuers (110)
Banks (100)
(90)
Firms prov
loans/Trade
Creditors
(109)
Retailers
(106)
Utilities
Providers
(106)
Other Credit Microfinance
Bureaus (105) Institutions
(106)
Sources and numbers of CB that provided information
Source: Doing Business 2013 : Data based on 114 CBs that provided information
Employers
(100)
Courts (100)
Statistical
agencies (99)
Other (90)
Credit Bureaus that collect data from utility providers
(in alphabetical order)
Argentina
Ecuador
Panama
Armenia
Estonia
Papua New Guinea
Australia
Fiji
Paraguay
Bolivia
Germany
Peru
Bosnia and
Herzegovina
Guatemala
Poland
Honduras
Botswana
Puerto Rico
Iceland
Bulgaria
Rwanda
Israel
Canada
Saudi Arabia
Kenya
Colombia
South Africa
Malaysia
Costa Rica
Swaziland
Mexico
Cyprus
United Kingdom
Namibia
Denmark
Uruguay
New Zealand
Source: Doing Business 2013
Africa- Decade of Change
 Democratization
Increased Transparency
Improved Legal Framework
 Robust Economic Development
Increased FDI flows
 Deepening of Financial Sector
New Financial Services
Reaching out to broader clientele
 Increasing Importance of SME & MFI sectors
Credit Reporting Trends in Africa
 Implementation of credit reporting frameworks to
enable sharing of credit information (Ghana,
Rwanda, Kenya, Tanzania, UMOA and others)
 Focus on Private Credit Bureaus rather than public
credit registries as a tool to share information
 Start of sharing positive and negative data e.g.
Rwanda, Ghana, Tanzania pilot in Kenya
 Inclusion of SME and MFI data
 Focus on capacity building for Supervision of
credit reporting
South Africa
Kenya
Zambia
Ghana
Nigeria
Rwanda
Namibia
Uganda
Botswana
Mauritius
Swaziland
Sierra Leone
Cameroon
Cape Verde
Central African Republic
Chad
Congo, Rep.
Equatorial Guinea
Ethiopia
Gabon
Liberia
Angola
Benin
Burkina Faso
Côte d'Ivoire
Guinea-Bissau
Malawi
Mali
Mozambique
Niger
Senegal
Tanzania
Togo
Zimbabwe
Comoros
Guinea
Lesotho
Gambia, The
Burundi
Mauritania
Seychelles
Sudan
Congo, Dem. Rep.
Eritrea
Madagascar
São Tomé and Príncipe
SSA Country Rankings (DB13)
“GETTING CREDIT” COUNTRY RANKINGS (OUT OF 185)
Highest performers
Countries with most
reform potential
Source: Doing Business 2013
154 154 154
159
167 167 167 167
176 180 180 180
129 129 129 129 129 129 129 129 129 129 129 129 129
104 104 104 104 104 104 104 104 104
83
40 40
53 53 53
12 12
23 23 23
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Comoros
Congo, Dem. Rep.
Eritrea
Gambia, The
Guinea
Lesotho
Madagascar
Malawi
São Tomé and Príncipe
Seychelles
Sudan
Tanzania
Zimbabwe
Benin
Burkina Faso
Burundi
Côte d'Ivoire
Guinea-Bissau
Liberia
Mali
Mauritania
Niger
Senegal
Togo
Cameroon
Central African Republic
Chad
Congo, Rep.
Equatorial Guinea
Gabon
Sierra Leone
Angola
Botswana
Ethiopia
Kenya
Mozambique
Namibia
Nigeria
Cape Verde
Ghana
Mauritius
Swaziland
Uganda
Zambia
Rwanda
South Africa
SSA Rankings: Depth of Credit Information across
countries
Depth of credit information index (0-6)
7
6
5
4
3
2
1
0
South Africa and Rwanda are the highest performers, whereas numerous
countries have the largest improvement and reform potential
Source: Doing Business 2013
Angola
Benin
Burkina Faso
Burundi
Cameroon
Cape Verde
Central African Republic
Chad
Comoros
Congo, Dem. Rep.
Congo, Rep.
Côte d'Ivoire
Equatorial Guinea
Eritrea
Ethiopia
Gabon
Gambia, The
Guinea
Guinea-Bissau
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mauritius
Mozambique
Niger
São Tomé and Príncipe
Senegal
Seychelles
Sierra Leone
Sudan
Tanzania
Togo
Zimbabwe
Uganda
Nigeria
Kenya
Zambia
Ghana
Rwanda
Swaziland
South Africa
Botswana
Namibia
SSA Rankings: Private Bureau Coverage still low
Credit Bureau coverage (% of adults)
70
60
50
40
30
20
10
0
Lack of private credit reporting infrastructure: zero coverage
Source: Doing Business 2012
Agenda
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Program objective
Donors
IFC products & Services
IFC Role
Delivery Model
Clients & Stakeholders
Portfolio & Pipeline projects
Achievements & Challenges
Opportunities going forward
BCEAO and Ghana case study
Program Objective
 Support IFC clients and stakeholders to develop or
improve credit reporting systems – private, public
or mixed reporting models.
Donors
Government of Switzerland
Austrian Ministry of Finance
Why? Huge financing gap in Sub
Saharan Africa
Percentage of unmet credit needs (Smaller type refers to the total value of the gap in
each region)
Central Asia & Eastern Europe
$ 322-394 billion
29-36%
High-income OECD
$1,035-1,265 Bn
Middle East &
North Africa
$323-395 billion
6-8%
308-376%
Latin America
$558-682 billion
116-142%
South Asia
$186-228 billion
14-17%
18-22%
Sub-Saharan Africa
$118-145 billion
338-413%
Source: MSME database 2011, McKinsey & Company
East Asia
$636-777 billion
<10
$3.2-3.9 trillion
globally
10-29
30-59
>60
Why?
Reduce
information
asymmetries
Support
efficient credit
allocation
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Strengthen
risk
management
A solid financial
infrastructure
serves both
ACCESS TO
FINANCE and
FINANCIAL
STABILITY
IFC Products & Services
 Technical support for private CRB development –
model selection, business planning, sourcing, selection
and contracting of technology vendors for CRB
deployments, country market assessments.
 Technical support for Public Credit Registry
development – development/review of bidding/RfP
documents, independent advisor support during early
stages of systems deployment.
 Legal/Regulatory development – technical input to CR
legislation, regulation, Codes of Conduct.
IFC Products & Services
 Development of data elements, Data Input File Formats,
Common data formats and business rules.
 Capacity Building – lenders, regulators, consumer groups
– e.g., use of credit bureau data across the account life
cycle, data quality, operational aspects, credit bureau
supervision.
 Knowledge Sharing – events, publications & training.
IFC Products & Services
 Technical support to increase participation of nonregulated credit providers: e.g., MFI’s – technical & risk
assessments, road map development.
 Support establishment of national working groups and
provide technical support to WGs.
IFC Role & Delivery Model
 Honest broker/independent advisor
 Global Credit Bureau & Risk Advisors supported by
regional and local staff
 Advisory Service project initiated through a Legal
agreement with Client
 Requirement for client contributions
Clients & Stakeholders
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Central Banks
Bankers Associations
Credit Bureaus
Consumer/MSME Associations
Portfolio, Closed & Pipeline Projects
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Ghana
Tanzania
Ethiopia
Sierra Leone
Liberia
Burundi
WAMU (UEMOA)
Zambia, Malawi, Nigeria & SADC (pipeline)
Achievements
 Private Credit Bureaus/Public Credit Registry
deployed/improved in Ethiopia, Tanzania & Ghana and
currently collect credit information.
 Market assessments & roadmaps developed for Sierra
Leone, Liberia, Burundi, DRC, WAMU.
 capacity building workshops conducted for lenders in
Ghana, Tanzania, Nigeria, Liberia, WAMU, Burundi,
Ethiopia.
Achievements
 Credit Reporting legislation/regulation adopted or revised
in 11 countries (including WAMU).
 Common data format adopted in Ghana.
 Processes and toolkit for credit reporting supervision
developed and utilized.
 Financial literacy material developed and tested.
 Site and exposure visits facilitated for stakeholders in
Ghana, Tanzania, Ethiopia, Sierra Leone.
Opportunities
 Increased interest and momentum for Credit Reporting in
SSA.
 Regional Solutions – WAMU, SADC, CEMAC.
 Leverage IFC and stakeholder experience.
 Innovation – develop and adapt models to specific country
requirements and needs.
 Collaboration with other partners – FinMark Trust, KfW etc.
Challenges
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Data quality
Suitable CR models in small markets
Capacity constraints
Impact achieved in the medium to long term
SSA Case Studies
 CLIENT NAME: Bank of Ghana
 DESCRIPTION: Provision of advisory services to
Bank of Ghana for credit reporting development.
 PRESENTER: Mr William Nyavor Bank of Ghana
 CLIENT NAME: BCEAO- Central Bank of UMOA
 DESCRIPTION: Provision of advisory services to
establish regional private credit bureau
 PRESENTER: Mr Symphorien Agbessadji BCEAO
Thank you
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