2Nd Regional CIS Conference Report 2013

2nd Regional Credit Information Sharing Conference Conference Report Unlocking Access to Affordable Credit September 24th and 25th 2013 Nairobi, Kenya The Hilton Hotel, Nairobi Association of Kenya Credit Providers Hosts Located at the Kenya School of Monetary Studies Central Bank of Kenya Noordin road, o Thika road Association of Kenya Credit Providers Ruaraka Nairobi, Kenya Financial Sector Deepening (FSD) Kenya USAID- Financial Inclusion for Rural Microenterprises P.O. Box 65041 – 00618 Sponsors t. 254 20 2652308 (wireless) Kenya Bankers Association Hosts: t. 254 20 864 6267/215 Transunion e: [email protected] Metropol CRIF www.ciskenya.co.ke Sponsors: Contents Abbreviations and Acronyms 3 About the Conference 4 Keynote Addresses: Opening Ceremony 5 Credit Information Sharing is Vital for 8 Enhancing Access to Affordable Credit in Africa Launch of the Association of Kenya Credit Providers (AKCP) 10 CIS Benefits: Roundtable Discussion 12 How CIS Transforms Lending and Borrowing Conditions 14 Case Studies of CIS in Sub-Saharan Africa 15 Impact of Credit Bureaus on Financial Inclusion 18 Supervision of the Credit Reporting Industry 20 Alternative Data to Drive Financial Inclusion 22 Governance of Private Credit Bureaus 24 Conference Pictorial 26 Decision Solutions 28 Financial Inclusion and Stability for African Credit Markets 31 Interactive Discussion 34 Alternative Dispute Resolution 36 Adopting a Smart Approach to Managing Growth 39 with Innovative Risk Management Solutions How to Make Lending Decisions Using Credit Reports 41 Closing Remarks: Spotlight on the SACCO sector 44 and the relevance of CIS to meet the sector’s needs Recommendations and Key Outcomes 46 List of Conference Participants 47 Conference Credits 49 Exhibitors Profiles 49 Exhibition Pictorials 51 Conference Secretariat: 53 2 Regional Credit Information Sharing (CIS) Conference Report 2013 Abbreviations and Acronyms ADR Alternative Dispute Resolution AMFI Association of Microfinance Institutions ATMs Automatic Teller Machines BoP Bottom of the Pyramid CBA Commercial Bank of Africa CBK Central Bank of Kenya CIS Credit Information Sharing CRBs Credit Reference Bureaus DTMs Deposit-Taking Microfinance Institutions FSD Financial Sector Deepening Trust – Kenya KBA Kenya Bankers Association KCISI Kenya Credit Information Sharing Initiative Kshs Kenya Shillings KSMS Kenya School of Monetary Studies KYC Know Your Customer HELB Higher Education Loans Board IFC International Finance Corporation MFIs Microfinance institutions NPLs Non-performing loans BCEAO Banque Centrale des Etats de l’Afrique de l’ Ouest PCBs Private Credit Bureaus SACCO Savings and Credit Cooperative SASRA SACCO Societies Regulatory Authority SMEs Small and Medium-sized Enterprises SSA Sub-Saharan Africa Telco Telecommunications USAID-FIRM USAID Financial Inclusion for Rural Markets WAMU West African Monetary Union Regional Credit Information Sharing (CIS) Conference Report 2013 3 About the Conference Project Manager, KCISI Jared Getenga he 2nd Regional Credit Information Sharing (CIS) Confer- information and how mobile technology can be used to create ence was held in Nairobi on September 24th and Septem- financial identities from previously excluded populations. Tber 25th 2013. This is the second conference of its kind, the first one having been held in July 2011 in Nairobi, Kenya. The conference was hosted by a partnership of several organizations that share a keen interest in seeing CIS advance not just in The first conference presented a platform for stakeholders within Kenya but across Africa. These organizations were the Association the East African Community to discuss credit information sharing of Kenya Credit Providers (AKCP), Central Bank of Kenya (CBK), Fi- (CIS) best practices and the impact of CIS on individuals, credit nancial Sector Deepening Kenya (FSD Kenya), and United States providers and economies. The meeting was motivated by the Agency for International Development (USAID). Special mention fact that many credit providers and borrowing entities run cross- is also due to the Kenya Bankers Association (KBA) for their invalu- border operations in the region, which creates the need for har- able support to AKCP in planning and funding the conference. monized CIS practices. It thus focused on International Standards for Credit Reporting, which were released in September 2011 by A Successful Event a Task Force coordinated by the World Bank, with support from Based on feedback from participants and the extensive interac- the Bank for International Settlements. tion that was witnessed throughout the conference proceedings, the 2nd Regional Information Sharing Conference proved to be a This second conference emphasized the overall goal of deliver- highly successful two days of learning, interaction and network- ing information capital in order to facilitate extension of reason- ing. We were immensely encouraged by the large turnout and ably priced credit in Africa and by so doing, catalyze economic diversity of representation at the conference, and for the support growth. The conference theme was, “Credit Information Sharing: by non-Kenyan delegates, who were undeterred by the fact that Unlocking Access to Affordable Credit.” In addition to promoting public the conference was held only a few days after Nairobi suffered a awareness about CIS, the conference sought to promote knowl- terrorist attack. Furthermore, the delegates set a number of am- edge sharing and dissemination of best practices in CIS. It also bitious yet achievable goals which are shared later in this report. sought to provide a platform where progress made in implementing CIS in different countries could be shared. This report has been prepared in order to capture the conference proceedings for the benefit of our delegates, other CIS stakehold- This year’s event brought together 328 delegates representing ers in Africa and the wider public. We at AKCP trust that you will central banks, credit providers, credit reference bureaus (CRBs) find it informative and interesting and that, in addition, it will and other credit professionals from over 15 countries in Africa. serve as a useful reference in the years ahead. Delegates heard local and international experts sharing about the importance of credit information sharing, regulatory consid- Jared Getenga is the Project Manager, KCISI. erations and developments in various credit markets on the con- Mr Getenga is currently responsible for steering the establishment of tinent. They also heard about the latest tools for analyzing credit AKCP. 4 Regional Credit Information Sharing (CIS) Conference Report 2013 Keynote Addresses: Opening Ceremony Speakers: (Clockwise) Habil Olaka, Chief Executive Officer, Kenya Bankers Association Benjamin Nkungi, Chief Executive Officer, Association of Microfinance Institutions David Ferrand, Director, Financial Sector Deepening Trust (FSD) Kenya Mark Rostal, Chief of Party, USAID Kenya – Financial Inclusion for Rural Microenterprises (USAID Kenya FIRM) Jeremy Ngunze, Deputy Chair, Kenya Bankers Association and Chief Executive Officer, CBA Kenya Banks and Deposit-Taking Microfinance Institutions (DTMs) have been among the first organisations to adopt CIS in Kenya. Accordingly, the opening ceremony was addressed by representatives of the associations of these two financial institution groupings, namely the Kenya Bankers Association (KBA) and the Association of Microfinance Institutions (AMFI). Other speakers included representatives of the conference hosts: AKCP, Central Bank of Kenya, FSD Kenya, and USAID-FIRM. he KBA CEO,Mr. Habil Olaka, welcomed participants and ments to allow for CIS, followed by the sharing of negative infor- informed them about the progress made in implementing mation only, first among banks only, and later with DTMs as well. TCIS in Kenya to date. The process started with legal amend- The latest development is positive information sharing among Regional Credit Information Sharing (CIS) Conference Report 2013 5 Keynote Addresses: Opening Ceremony banks and DTMs on a pilot basis. Where the law permits, banks of banks before they move on to MFIs. As a result, after the banks have also opened up their credit infor- introduced CIS, the trend has been that some of mation to other credit providers. Mr their defaulting customers have migrated to MFIs. Olaka also noted the positive impact Accurate information Therefore, even with their involvement in a pilot that CIS has had in terms of reduc- is the lifeblood of the CIS project, MFIs have reaped significant benefits, ing the incidence of non-performing including improved loan portfolios, a reduction in loans. He echoed the call for support credit industry … the poor serial defaulters and greater honesty from clients. for AKCP from all credit providers and “need credit and have the This has allowed MFIs to devote more time to emphasized banks’ readiness to coop- capacity to take it on and business development. Mr Nkungi however not- erate with other credit providers. manage it responsibly. ed that the biggest challenges facing the growth of CIS include the institution of a comprehensive The AMFI CEO, Mr Benjamin Nkungi, However it takes accurate“ legal framework on CIS and the need for the expressed satisfaction with the cre- information for credit wider populace to understand the benefits of CIS, ation of AKCP as it sends a strong sig- providers to serve them which exceed any potential disadvantages that it nal that CIS will not be the preserve may bring. MFIs also

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