Credit institutions under UMRA don’t share data with CRBs - Tumusiime

What is the relevance of your service in an economy like Uganda?

First, as Metropol Credit Reference Bureau, is all about bridging the credit information gap between lenders and borrowers, what is technically referred to as information asymmetry. Lenders naturally wish to obtain as much information as possible about a borrower but the borrower is willing to give as less information as possible in order not to jeopardise his chance of getting a credit facility. That is where we come in handy. We collect credit data from several credit providers especially those regulated by Bank of Uganda and processes that data into a credit report for each borrower. This way, lenders get to access adequate information about a borrower without much hassle and can make a sound lending decision. Borrowers also benefit from this credit information sharing mechanism as those with positive credit profiles can easily negotiate for better credit terms. 

What is in it for sectors that should benefit from CRB services?

We complement the central role of banks and other financial institutions in extending financial services to Ugandans. We have played a big role in enhancing financial inclusion through minimising incidences of multiple borrowing by customers who lack the capacity to repay their loans; thus, leading to defaults. This frees up funds to other borrowers thus widening the reach of credit services. Borrowers’ repayment behaviour has also improved overtime as they become aware that their credit information is shared with the bureaus. They don’t want to limit their chances of obtaining further credit since many lenders are able to view their credit reports. As more borrowers and lenders embrace the role of CRBs, the economy will benefit through increased provision of credit especially to private sector players. 

What are your thoughts about the appreciation of CRB services?

Opening up the CRB space to other bureaus seven years ago has also enabled new players to promote their services to the targeted customers. In this way, there has been some mindset change among both the lenders and borrowers in the way they look at CRB services. 

However, several awareness programmes still need to be done targeting the borrowers. The inadequate appreciation of the Credit Information Sharing Mechanism is attributed partly to the limited number of participating institutions. Presently, only financial institutions regulated by Bank of Uganda are allowed to share their borrowers’ data with the Credit Reference Bureaus. Once the scope is widened, the situation will change for the better. 

 How much of an opportunity or a challenge is the huge informality of the economy in your efforts to render your services?

There are thousands of unlicensed credit providers and other informal groups out there extending credit facilities to thousands of borrowers daily. Even those licensed by the Uganda Microfinance Regulatory Authority (UMRA) are not yet submitting data to the bureaus owing to the existing legal limitations. This presents a challenge as it means the financial institutions currently sharing their borrowers’ data with the bureaus lack the visibility of what is happening on the other side of the market divide. 

However, in the near future, regulations allowing the bureaus to collect data from other credit providers apart from only those regulated by Bank of Uganda will be released. This will then present a huge opportunity to both the bureaus, lenders and borrowers alike as the scope of credit information sources will widen, giving better visibility of a borrower’s credit profile from several credit providers. 

Most players in the MSME sector are looking for something different, comprehensive and even tailor made. These demands are not exactly what is available in the market. What are your thoughts?

Competition breeds innovation which leads to efficiency and increased value to customers. We have, therefore, continued to innovate and ensure we offer value for money to our customers by developing value added solutions that simplify the credit appraisal process and support sound lending decisions. We also offer the best customer service by ensuring fast turnaround time to customer inquiries and technical support in case of system failures. We believe we are the go to CRB in the country. 

What is your view of the Ugandan market thus far vis-à-vis the Kenyan one where you are a leading player? 

The Kenyan credit market is more advanced, with real time submission of credit data as opposed to ours which is monthly. The scope of credit providers submitting data to the bureaus is wider, including fintechs, insurance companies and other trade credit providers.

The borrowers’ appreciation of CRB services is also at a higher level as they know the implications of being negatively listed at the bureau.  In Uganda, the scope of participating institutions is still limited to Bank of Uganda regulated financial institutions. Borrowers’ appreciation of bureau services is still limited but the situation will improve with time. 

 With the current tough economic situation, thanks to the ongoing effects of Covid-19 and the rising cost of commodity/inflation, how important are CRB services?

Now more than ever, lenders should embrace our CRB services. With the tough economic situation, multiple borrowing is high as people try to make ends meet. Even borrowers that were paying well before may start to default. 

Therefore, it is no longer adequate for a lender to check the borrower’s credit report only at the time of loan appraisal. Lenders should do monthly checks or utmost quarterly to track changes in a borrower’s credit profile. Someone may be paying one lender in a timely manner but defaulting with another lender and it is only a matter of time that they will start defaulting on all their credit facilities. So, the earlier this is detected, the better for recovery efforts. 

Any structural or administrative or legislative agenda that you would want to see instituted or expedited to enable you or the industry execute its role seamlessly. 

We await the release of regulations to operationalise the law that mandates other credit providers such as microfinance institutions, SACCO’s, trade credit providers and utility companies to start submitting data to the bureaus and consequently carry out credit referencing. We request Bank of Uganda to expedite the process and unlock the credit information sharing space. 

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