Promoting Credit Bureaus: The Role of Microfinance Associations
This note discusses the roles of credit bureaus in promoting access to finance and microfinance associations (MFAs) in promoting credit bureaus.
Credit bureaus can play an integral role in promoting financial inclusion. Clients with strong repayment histories may benefit from faster service and preferential terms and conditions. Financial service providers are able to profit from reduced transaction costs and improved portfolio quality. MFAs can contribute to developing credit bureaus in their countries. Opportunities range from taking an active role in the development and ownership of a credit bureau to more indirect facilitation of their use. Associations can lead activities that include:
- Education and awareness building;
- Legal and regulatory framework development;
- Conducting feasibility studies;
- Developing business plans;
- Conducting technical scoping studies and help in selecting service provides;
- Helping in pilot testing, training and promotion;
- Being directly involved as owners and operators.
Finally, key lessons from MFAs who have developed and promoted credit bureaus highlight the importance of promoting trust and educating members. It is also important for MFAs to assess costs as well as the pros and cons of different models, and use appropriate technology.
