Kenya Credit Information Sharing Initiative – A Progress Report 2008-2011: Challenges and Opportunities

This report evaluates the progress charted by the credit information sharing mechanism rolled out by the Central Bank of Kenya (CBK), Kenya Bankers Association (KBA), and Financial Sector Deepening Trust (FSD –Kenya). The initiative aims to introduce credit referencing as a risk management tool to create a vibrant and globally competitive financial sector. From the registration of the first credit bureau in February 2010, the level of information sharing increased dramatically. The project established a sound basis for broad credit information sharing in the Kenyan financial sector. Some of the highlights include:

• CBK played a critical role in developing the credit information market;
• Enquiry volumes from private banks to submit data have steadily increased from 48,000 per month in August 2010 to 88,000 in May 2011;
• Presently credit bureaus and credit information sharing is primarily viewed as a debt collection tool.

The report concludes that within the current limitations, credit reference bureaus make at most a very limited contribution to financial inclusion. However, if the weaknesses which have been identified are addressed, information sharing through credit reference bureaus has the potential to make a significant contribution to financial inclusion.