Local firm applies for credit bureau licence

HARARE - Expert Decision Systems (XDS), a local credit ratings agency, has applied to the central bank for a licence to establish a credit bureau.

The firm targets to provide financial sector players with individuals’ and corporates’ credit evaluations.

A credit bureau maintains consumer or borrowers’ credit data files and provides the information to authorised users —  lenders, insurers, and employers — for a fee.

The move helps facilitate responsible lending, particularly at a time Zimbabwe’s financial sector is saddled by non-performing loans, estimated at $700 million.

Farayi Dyirakumunda, a director with XDS, said the company was established in 2012 and is already offering credit evaluations to agro companies and ready to set up a financial services credit reference bureau as part of economic reforms to attract more investment.

“We are currently waiting to hear from the Reserve Bank of Zimbabwe (RBZ) concerning the outcome of our licence application to provide services to the financial sector,” he said, adding that the Central Bank was currently putting a framework to allow private firms to collect information in the sector.

“Once the framework is in place, we are confident that we will be able to provide our services to the banking sector,” said Dyirakumunda.

Zimbabwe currently has no active national credit bureau and calls have been made from across various quarters for the establishment of such an entity.

There has been growing appetite for credit following the return of credit facilities in the southern African country due to macro-economic stability.

Market experts say Zimbabwe’s financial sector would also change dramatically once a financial services credit bureau becomes operational, as absence of such a critical facility has created information asymmetry in credit vetting.

The bureau would promote a loan repayment culture, ensure easy access of information by banks, easy assessment of credit risk at sectoral level and help borrowers build good profiles for more bargaining power.

“The benefits of having national credit bureaus are two-pronged. On one hand, consumers will benefit because they can easily get your credit score and because of your excellent credit score you are going to be able to negotiate for better rates.

“It will also help the financial institutions because they will have a place to get credit reports for persons who are seeking credit,” said a senior economist with a local bank.

In his maiden monetary policy statement recently, the Reserve Bank governor John Mangudya indicated plans to establish a national credit bureau to minimise bad debts in the banking sector.

“We are working on a national credit bureau to minimise bad apples in the banking sector. That, we are going to do without fail. It will go through just like any other important Acts. We need to find a lasting solution to non-performing loans,” said Mangudya.

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