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Badilisha Lugha KISWAHILI

Credit Reference Bureau data to undergo periodic reviews

20th December 2012
Onica Makwakwa

Borrowers' credit history is no reason to deny them loans as well as other financial services, according to Consumer International (CI), the world’s federation of consumer groups that serves as the only independent and authoritative global voice for consumers.

Speaking recently in Dar es Salaam, Onica Makwakwa Consumer International (CI) representative warned that most of the non-traditional credit history data bases are not reliable due to discrepancies in the system in this transitional period, such as charged bills for services that were never rendered.

Makwakwa was adding to a statement by Abubakar Ukhalya from the Bank of Tanzania (BoT) who was representing Agapipi Kobelo, the BoT director for banking at a stakeholders’ workshop on Credit Information Sharing held recently in Dar es Salaam and organised by the International Finance Corporation (IFC).

Ukhalya was explaining that the Credit Reference Bureaus (CRBs) source their client information from non-traditional sources such as utility providers and phone companies. They also rely on external debt collection agencies, public institutions like the Business Registration and Licensing Authority as well as from the Courts.

It is this information that the bureaus then use to prepare credit reports that would then be sold on say e-quest to creditors amongst other persons or companies that might be seeking this background information. When it comes to loans however, for the purpose of analysing and evaluating the loan requests, this inconsistent and even inaccurate information can decide approval or denial of a loan.

He did however clarified: “Upon request, consumers will be allowed to only once in a year access their credit reports and challenge information contained in there…” further saying that obtaining the record is only with a written consent of the borrower, mostly due to the question of how much privacy one is willing to give up. Vidar Vidarsson, country manager for Credit Info Tanzania Limited allayed any lingering worries, saying should it turn out that there are any discrepancies, would-be borrowers would certainly seek to acquire accurate information by returning to the source for verification.

“We are here to provide highly predictive indices for risk...we intend to do that as accurately as possible…“

The CRBs are set to start their operations later next year and are hoped to reduce loan defaults, lower interest rates and increase access to credit, major hurdles in business establishment and expansion.

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