Africa’s financial sector players push for credit infrastructure reforms

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PHOTO/COURTESY: The Standard

Africa’s financial sector players yesterday called for implementation of credit infrastructure reforms for improved financial inclusion in the region.

The financial experts are attending the 5th Africa Credit Information Sharing (CIS) Conference under the theme ‘Credit Infrastructure for Sustainable Growth: Entrenching Dynamic Assessment of Risk’ to discuss how the infrastructure around credit information sharing can provide a more inclusive credit market in Africa.

Speaking during the opening ceremony of the two-day conference, Mr. Jared Getenga, Chief Executive Officer, Credit Information Sharing Association of Kenya (CIS Kenya) noted that a robust credit infrastructure is key to solving some of the perennial financial sector challenges such as high cost of credit and financial insolvency.

“A strong credit infrastructure will enable efficient and effective access to finance, financial stability and socially responsible economic growth through credit reporting, secured transactions and collateral registries and insolvency and debt resolution,” said Mr. Getenga.

The proposed credit infrastructure reforms include establishment of resilient credit reporting systems, collateral registries, legal structures and regulatory frameworks for fintech development and credit reporting mechanisms, insolvency and debt resolution frameworks, alternative credit scoring mechanism among others.

Ms. Sheila Mbijiwe, Deputy Governor, Central Bank of Kenya (CBK), reiterated the importance of having a stable and inclusive financial sector for economic development of a country.

“To achieve transformation and economic growth, there is a need to have sound financial systems that build and connect savings to investments. This will create opportunities for scaling up financial inclusion through ease of credit access and resolution of debt,” said Ms. Mbijiwe.

The conference comes at a time when the Central Bank of Kenya (CBK) has issued the Kenyan Banking Sector Charter that places the CIS mechanism at the centre of efforts to improve loan pricing and transparency in Kenya’s credit market.

In addition, a movable collateral registry has been established to support the implementation of the Movable Property Security Rights Act, 2017. The Registry is set to improve access to credit for small-to-midsize enterprises who have been locked out of the formal credit market because of the informal nature of their records and lack of collateral for secured loans.

Over the years Kenya has witnessed improved ranking in the ease of doing business ranked 2nd in Africa after Rwanda in 2019, an achievement in part attributable to a strong Credit Information Sharing (CIS) framework that is continuously being improved.

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