Credit Bureau Association of Nigeria

Jan 21, 2014
Could you briefly introduce CBAN? Perhaps, the single most articulate phrase that best describes CBAN is the Vision of the Association "Credit information for Wealth Creation". The Credit Bureau Association of Nigeria was set up by the three licensed credit bureaus in Nigeria (CRC Credit Bureau Ltd, CR Services Credit Bureau Plc, and XDS Credit Bureau Ltd) to promote the development and use of credit reporting in Nigeria. CBAN was set up to create a platform to protect the interests of
credit bureaus; articulate and promote policies and regulations favourable to the lending industry in particular and the financial and banking industry in general; and proactively monitor developments relating to the promulgation of laws and issuance of regulations that have bearing on the credit bureau industry. For more on CBAN, visit What are your main activities? CBAN's main activities revolve around advocacy with regulators and other stakeholders to achieve the following immediate goals: 1. Promote Policies & Regulations favourable to the Lending Industry through the adoption of unique identifiers in financial sector along with a financial token for borrowers to boost consumer financing and consequently the growth and profitability of the credit bureau industry. 2. Protection of the interests of Credit Bureaus by hosting and sponsoring regular industry events that include press briefings and credit products exhibitions industry. What are some of your major achievements? Several meetings held with the Central Bank of Nigeria Governor, CIO and other stakeholders on Unique Identifier, Data quality, and Guidelines culminated in the following:
  • CBN initiated an industry and stakeholder-wide review of the guidelines prior to making any changes;
  • CBAN was recognised as a stakeholder group. This recognition made it possible for the association to be actively involved in the legislative and regulatory processes leading to the establishment of the present regulatory framework for the credit bureau industry. Specifically, CBAN's involvement in the development of the "Revised Guidelines for the Licensing, Operations and Regulation of Credit Bureaux and Credit Bureaux Related Transactions in Nigeria" ensures that provisions in the guidelines are favourable to the credit bureau industry;
  • CBAN are active participants with Central Bank of Nigeria and the National Identity Management Commission (NIMC) on the issue of a unique identifier;
  • CBAN is a member of the Central Bank of Nigeria/Nigeria Inter-Bank Settlement System (NIBSS) Committee. While the nation awaits a unique identifier from NIMC, Banker's committee decided upon a financial ID for the Industry and appointed NIBSS and Ernst and Young to develop it. In the course of several meetings held, The Committee invited CBAN to advise them on uniform KYC and what would be useful to credit bureaus. The Committee also asked credit bureaus to design a template for how the information should be arranged. The design has since been completed and forwarded to NIBSS;
  • Meetings held with the representatives of the International Finance Corporation ("IFC") with some actionable outputs are also instances of the association's advocacy success. IFC arranged a trip to Ghana for CBAN members to see a collateral registry in action in view of helping banks to deepen access to credit for SMEs by establishment of a collateral registry; and
  • The Association has been proactively monitoring developments relating to the promulgation of laws and issuance of regulations that have bearing on the credit bureau industry.
Could you describe some key challenges CBAN is facing? Apart from lack of unique identifier for consumers, the biggest challenge CBAN is currently facing is how to improve data quality which is the most effective way to demonstrate value. At the moment, Credit Bureaus do not get good data. Data is not accurate/correct, not complete, not current, and not compliant with standards. These problems are traceable to the following:
  • Data is not being captured at source, in the banks, for various reasons which include full data not supplied by customers;
  • Not enough mandatory fields for data entry operators;
  • Technology constraints in banks, - Slowness of processing;
  • Lack of internal data quality guidelines.
Other inhibitors to growth are: Lack of full understanding & appreciation of credit information by bank decision-makers; emphasis on incorporated names for lending activity; individual borrowers limited to staff of big name companies; IT skill gaps in Micro Finance Banks; and delay on use of credit bureau checks, and quarterly review of loans. Even though steps are being taken in a collaborative manner to address, for example, adoption of a unique identifier, there is so much which needs to be done to improve data quality and in the process, demonstrate value. Demonstrating the value credit bureaus add to creditors' will go a long way in increasing the patronage, and ultimately, sustainability of credit bureaus in Nigeria. In what ways can the Partnership for Making Finance Work for Africa (MFW4A) support CBAN's work? I believe we have taken the very first step in this direction which is providing CBAN with this platform to promote its visibility on the continent. Opportunities for networking and collaboration are very essential to enable CBAN deliver on the objectives for which it was set up. The SMEs are a strategic pillar of any economy. In Nigeria, the Micro Finance Banks are the SMEs highest lenders. However, gaps in the IT skills of most MFBs means that they are a great contributor to the challenge of data quality credit bureaus currently face. In addition, it means that whatever value the credit bureaus add to the services of creditors has not optimally benefitted the MfBs and by extension, the SME sector. Exposure to technical and financial partners who shall collaborate with CBAN in encouraging total inclusion of the MfBs into credit reporting would go a long way in increasing access to finance for the SMEs in the long run. Collaboration on trainings for CBAN stakeholders on improving data quality is imperative as well as building capacity for CBAN staff and members. High level advocacy with international development partners on regulatory issues is also an area for which collaboration with MFW4A shall be impactful.