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Nigeria is setting up its first credit bureau in an attempt to improve transparency, reduce fraud and enhance access to financial services to poorly served segments of the market. It will officially be called the Credit Reference Company (CRC).
Nine Nigerian banks have set up the bureau in partnership with Dun & Bradstreet, a global credit information provider, who have experience in running private credit bureaux in emerging markets. Accenture, a global management consulting, technology services and outsourcing company, and the International Finance Corporation (IFC), the private sector arm of the World Bank are supporting with technical and advisory services. The investing banks in CRC are United Bank for Africa Plc (UBA), First Bank of Nigeria Plc, IBTC Chartered Bank Plc, Guaranty Trust Bank Plc and Diamond Bank Plc. Others are Intercontinental Bank Plc, Standard Chartered Bank, First City Monument Bank (FCMB) and Access Bank Plc.
A credit bureau or credit reference agency is a company that provides credit information on individual borrowers. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate applied to loans. Credit bureaux collect and collate personal financial data on individuals, from financial institutions with which they have a relationship. The data are aggregated and the resulting information is made available on request to contributing companies for the purposes of credit assessment and credit scoring.
The purpose is to establish a credible database of information on creditworthiness and so help credit providers make more informed decisions about their lending. This could act as a catalyst to improve consumer lending.
Mr. Chika Mordi, Chairman of the Business Track Committee of CRC (who is also an Executive Director of United Bank for Africa Plc), said that the agency’s formation, “has a very strong impetus of helping to grow the overall income level, to reduce poverty, to make Nigerian companies more competitive.”
Amy Rennison, Microcapital Writer
Additional sources:
Reuters: http://africa.reuters.com/country/NG/news/usnL13745875.html
