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Africa Credit Reporting Program Launched to Expand Access to Finance across Region


In Johannesburg:
Desmond Dodd
Phone: +(27)11 731 3053
Email:
ddodd@ifc.org

In  Washington
:
Rita Jupe
Phone: +(202) 458 8967
Email:
rjupe@ifc.org


Cape Town, October 6, 2006—The International Finance Corporation and the World Bank today launched the Africa Credit Reporting Program to support governments, businesses, and other stakeholders in developing credit reporting systems in Africa. The initiative is intended to encourage the creation and expansion of credit information bureaus—an essential component of well-functioning financial markets. Information is especially important for expanding credit to underserved segments of society and the business community, such as those with lower incomes and small and medium enterprises. The program is funded by IFC, the Netherlands, and Visa.

The $1.5 million technical assistance program was announced during the Conference on Credit Reporting Systems in Africa in Cape Town, South Africa, organized by the World Bank and IFC with the support of four international credit bureaus active in Africa: Compuscan, Experian, TransUnion, and XDS. The conference brought together specialists from 37 countries, including more than 50 central bank representatives from 20 African nations.  


Credit bureaus allow lenders to share information on a borrower’s credit history, providing lenders with information to help them better assess risk and expand access to finance to more borrowers. According to the IFC-World Bank Doing Business 2007 report, only four African countries have effective credit bureaus: Botswana, Namibia, South Africa, and Swaziland. The credit bureaus in Africa have information on only 3.5 percent of the population. By comparison, bureaus in Latin America cover nearly a third of the population, and those in OECD countries cover 59 percent.


“Africa has an urgent need for private credit bureaus. Access to credit is one of the main constraints facing businesses,” said IFC’s program officer, Nataliya Mylenko. World Bank research based on a survey of over 5,000 businesses worldwide shows that, in countries with private bureaus, 40 percent of small and medium enterprises have bank financing, compared to only 28 percent in countries without them. “Credit reporting increases the quality of credit decisions and makes financial markets more stable,” added Mylenko. The use of credit information allows banks to reduce loan processing time and cost by a quarter or more.  Default rates are 40 to 80 percent lower in countries with effective credit information systems.

“The Africa Credit Reporting Program is a much needed initiative,” said Koby Koomson, a former ambassador from Ghana to the United States, at the conference launching the initiative. “Lenders in the region are often not able to share information due to a lack of adequate laws and regulations. This program will help governments share good practices and learn from the experience of other countries in developing successful credit reporting systems.”


The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org

The World Bank is a vital source of financial and technical assistance to developing countries around the world. It is made up of two unique development institutions owned by 184 member countries—the International Bank for Reconstruction and Development and the International Development Association. Each institution plays a different but supportive role in our mission of global poverty reduction and the improvement of living standards. The IBRD focuses on middle-income and creditworthy poor countries, while IDA focuses on the world’s poorest countries. Together they provide low-interest loans, interest-free credit, and grants to developing countries for education, health, infrastructure, communications, and many other purposes. For more information, visit
www.worldbank.org