Kenya licenses new credit bureau

Feb 17, 2010

Kenya has licensed the Credit Reference Bureau, which is expected to reduce the cost of credit for small and medium-sized enterprises.

It will supply lenders with details of borrowers' credit history and aim to help SMEs that have a strong repayment record.

Professor Prof Njuguna Ndung'u, the Central Bank of Kenya (CBK) governor, told Business Daily Africa that "the credit information collected by the bureaus will act as information capital. Over time, this will reduce the demand for physical collateral and enhance bank and borrower relationship."

The facilities will attempt to inform lenders on the credit worthiness of an applicant, which is likely to benefit SMEs that were previously deemed to be a risk.

In addition, the new system requires banks to disclose and share the credit details of their borrowers with other money-lending institutions.

According to the CBK, the sustained development of the information-sharing industry will play a vital role in reforming developing countries' financial sectors.