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BoT licences two foreign firms for credit reference

16th December 2012
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Bank of Tanzania

The Bank of Tanzania  has selected Creditinfo International GmbH of Germany and US business information firm Dun and Bradstreet  to bring  the country‘s banking and credit system to the next level.

The two firms were picked as a result of a tender process organised by the Bank of Tanzania with the support of the World Bank, with Creditinfo selected to set up a Credit Reference Databank System.

"This important step will help the Bank of Tanzania ensure financial stability and enable lenders to assess the credit risk of potential customers,“ a senior central bank official said.

For years, Creditinfo has provided solutions for credit bureaus and central banks the world over. The company uses official and customer information sources to facilitate best practice decision making in credit risk management.

Currently operating in 16 countries, Creditinfo has already acquired extensive experience in emerging markets, the company says in an internet entry.

"We are currently working on two projects in Africa,” says Hakon Stefansson, senior manager of Creditinfo International GmbH.

“One with the Central Bank in Sudan, implementing a credit bureau software, and the other in Cape Verde, where we are setting up a credit bureau with the local banks and the Chamber of Commerce.

„In Tanzania we have a different approach as the Bank of Tanzania will not be running a credit bureau. We believe this can be a good precedent for other countries and are looking forward to this challenging project, convinced that it will be successful.

Our partner, the Bank of Tanzania, has already done an excellent job in the preparation process,"   he stated.
 Dun & Bradstreet, a global business information firm, was licensed for a credit reference bureau.

It is given in an internet entry as  Dun & Bradstreet, Inc., a public company headquartered in Short Hills, a community in Millburn, New Jersey, in the United States  that licenses information on businesses and corporations for use in credit decisions, business-to-business marketing and supply chain management. Often referred to as D&B, the company maintains information on more than 205 million companies worldwide, the entry noted.

The BoT director of banking supervision, Agapiti Kobelo said the task of the two companies would be to provide customer credit reporting services recorded in the system by financial institutions.

 A one day stakeholders’ workshop on credit information sharing was held yesterday in Dar es Salaam, organized by the Tanzania Consumer Advocacy Society (TCAS) in collaboration with   Consumers’ International, to discuss consumer educational awareness.

He said BoT has licensed the two companies in order to ensure fruitful operations of the credit reference system in Tanzania, to effectively supervise the operations of the reference databank to ensure that the information collected is managed securely and responsibly at all times and in accordance with provisions of the law and regulations.

“Through the system, the borrowers’ information would now be easily acquired by other banks from the companies if needed to see if they might have other loans taken from other financial institutions,” clarified Abubakar Ukhotya, a central bank official. Students who take educational loans will also be more easily traced to their eventual employers, he said.

 The credit reference system is designed to collect and provide information on the payment record of clients of lending banks and other financial institutions, along with savings and credit schemes and other entities engaged regularly in the extension of credit facilities.

During the workshop some stakeholders from invited financial institutions expressed their concern on the awareness of the system saying that bank customers need to be educated on the importance of the system before going to an institution to seek for loans.

Contributing to discussion on customers’ awareness, TCAS executive director Benard Kihiyo noted that while the benefits of a sound credit information sharing system are evident, it is critical to educate borrowers (consumers) on how to use their credit reports and manage their level of debt.

He also insisted on consumer education, noting that it is an important part of the process of awareness and understanding for borrowers. “This is a basic consumer right that must be insisted upon the general public for comprehensive records,” he elaborated.

Financial education is therefore an important pillar which complements enhancing credit information sharing, he said, affirming that the consumer awareness program on information is equally important.

Onica Makwakwa of Consumer International noted that information on customers is needed by loan givers to determine the background of the borrower, with other institutions. The workshop brought stakeholders from BoT, CSOs, banks, credit reference firms, SACCOS, VICOBA and  various other financial sector institutions.

SOURCE: GUARDIAN ON SUNDAY