KENYANS WILL NOT ACCESS LOANS BECAUSE OF THIS

CRB listing returns as Uhuru freeze ends
On October 20 last year, the then President Uhuru Kenyatta suspended the negative listing/blacklisting of borrowers with arrears of less than Ksh.5 million and backdated the order to September 2020.

However the freeze which was initiated as a COVID-19 pandemic support measure is set to end at midnight on Friday allowing creditors access to borrowers’ credit histories.
According to data provided by the Metropol Corporation CRB, an estimated 19 million Kenyans have their credit histories with CRBs, out of which six million are negatively listed or 22 per cent of borrowers.

Financial services providers will resume their access to borrowers’ credit information from Credit Reference Bureaus (CRB) from Saturday as a freeze instituted a year ago lapses.

On October 20 last year, the then President Uhuru Kenyatta suspended the negative listing or blacklisting of borrowers with arrears of less than Ksh.5 million and backdated the order to September 2020.

However, the freeze which was initiated as a COVID-19 pandemic support measure is set to end at midnight on Friday allowing creditors access to borrowers’ credit histories.

“We froze some of the uses of it (CRB) in the context of COVID-19. COVID is now behind us,” Central Bank of Kenya (CBK) Governor Patrick Njoroge said on Friday.

According to data provided by the Metropol Corporation CRB, an estimated 19 million Kenyans have their credit histories with CRBs, out of which six million are negatively listed, or 22 per cent of borrowers.

Nevertheless, the blacklisting of borrowers with negative credit history is set to go as the new government pushed for reforms in the credit information sharing (CIS) mechanism.

Nevertheless, Metropol CRB Managing Director Sammy Omukoko has blamed lenders for blacklisting borrowers instead of using the CIS data which is issued as credit scores to borrowers.

“Going forward as illustrated by the new government, everyone should have access to credit. This can only be done when each borrower is assigned a credit score by CRBs,” he said.

While admitting to the fragile use of credit history, CBK Governor Dr. Patrick Njoroge has welcomed reforms in the CIS mechanism to make the system a better tool for customers irrespective of their respective financial management journeys’.

“Credit information sharing has been a significant step forward in how we do business. We would never manage to adequately implement the risk-based pricing of loans without the CIS. However, what we need to do as the President has indicated recently and requested is to look into credit information sharing and improve it further,” added Dr. Njoroge.

Earlier this week, President William Ruto called for the introduction of credit scores to end the practice of lenders using negative credit information listing as the sole determinant of credit issuance to borrowers.

“Instead of saying you are in or out, we should have a credit scoring mechanism so we can have a graduated list from the least to the best so that everybody can have a chance even if you are somewhere at the bottom. You can always walk your way up as you learn the ropes,” President Ruto said on Wednesday.

“What we are asking is we don’t want credit listing to be an all-or-nothing, in-and-out engagement. We want credit listing to be a facility that gives everybody a chance to be their best in their own time.”

President Ruto has nevertheless stated that he does not intend to do away with the credit information sharing mechanism or CRBS and even cheekily suggested that the CBK Governor eases such concerns by the bureau operators.

“It’s not in our position that we are against CRBs. Our position is that we should change the model of listing so that we do not make it an all-or-nothing affair, unfairly disadvantaging borrowers,” the President added.