NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, July 8, 2014

MEMBERS of the public may soon start accessing credits on competitive terms, thanks to the Credit Reference Bureau (CRB), that commercial banks have embraced amid optimism that the data base will help to extend financial services to more people, a new study has shown.

CRB is the database for consumer credit information that provides details of individuals’ borrowing and bill-paying habits to help especially lenders to predict the future credit behaviour of their existing and potential customers.

“Financial inclusion in the banking sector is rising, as evidenced in Tanzania, Kenya, Rwanda and Uganda. This is in line with stronger economic growth, which is successfully incorporating more people into the formal economy,” the study report by Ernest and Young (EY) notes.

Presenting the report to banking sector stakeholders in Dar es Salaam at the weekend, Country Managing Partner for EY, Mr Joseph Sheffu, also noted that the role of credit bureaus is likely to play a major role in facilitating increased financial inclusion.

“Banks will be able to extend credit on a more informed basis,” he said, pointing out that the special topic this year focused on the role of credit bureaus in boosting responsible and profitable credit extension and how that in turn could help stimulate economic growth Giving Tanzania’s outlook, Associate Director at EY, Mr Chacha Winani, said that in the case of Tanzania, financial inclusion (banking sector) rose from 9.2 per cent to 13.9 per cent between 2009 and 2013.

“While this ratio remains low, even in emerging standards, the banking sector has seen its retail clients base rise by nearly half over the space of four years,” said Mr Winani. He noted that increasing financial inclusion, coupled with strong GDP growth, will continue to support growth in the banking sector in the medium.