Chris Agabi
12 June 2008
interview
Lagos — Credit bureau service is still nascent in Nigeria, just some five years old. In other climes where the service is rooted, no lender processes a loan application without credit re-payment history obtained from credit bureaux on an applicant.
In this interview, the Chief Executive Officer of Credit Registry Mr. Taiwo Ayedun, explains the relevance of the service and its possibilities of quickly growing Nigeria's economy.
Could you briefly tell us your background and how you ventured into credit bureau services?
I have a background in software engineering; haven read computer science at Illinois Institute of Technology. That background probably gave me the opportunity to know biometrics technology which has formed the core of our technology in CreditRegistry because we are the first credit bureau in the world, in a modern credit bureau system, to introduce biometrics in our data collection process. I couldn't have been able to do that if I didn't have knowledge of software. My last job as a software engineer before floating this company was with Microsoft Corporation in Washington DC.
Before now, did you have prior experience in credit bureau services and why did you introduce it in Nigeria?
Credit bureau happens to be just large database assistance but when you call it a credit bureau, there is the assumption that it is such a complex specialist's thing. Of course you have got to have some skills like I did in computer software which is critical but it's not so technical a process that you cannot do. I also did some research before venturing into it and haven lived in the USA for 14 years and seen how the system works, I was able to venture into it. I established it because it has capability of impacting positively on our economy. Because Nigerians would know that a database of their credit repayment history does exist, they would pay their debts and the banks would be more willing to give more credit. This would improve consumption of goods and services thus, expand the revenue base of the retailers and manufactures, this would translate to employment possibilities and higher tax revenue for government.
How are you then partnering with government on this?
The partnership we have is to the extent that the government regulates our industry. The information we collect is about individuals hence the need to protect their privacy. No bank for instance should be able to access information on you except you have approached the bank on business transactions. Even when you do approach a bank say for a loan, the bank would also have to seek your permission to access your credit re-payment profile from a credit bureau as a requirement to process your loan. So you will give them consent by signing an agreement authorizing them to use your information before we can release such information to them. Also none of our employees can give your information to anyone because we are strict about that.
Only the individual decides who uses his or her information. On that basis, government would have to guide with appropriate regulations. If you asked for partnership in terms of whether we need government support, yes, to the extent that they will create conducive environment for us to operate. The services that we offer have tremendous value to the banks and lenders. They need to know the risk that the potential borrower holds hence, the need for them to use credit bureau services to check whether the client pays debts or not. So there is need for good policies from the government on this industry. Again if, perhaps government say, for a healthy financial system, they would persuade the banks to use credit bureau information before issuing loans, we could partner on that. For now we don't have any form of partnership other than, the CBN, which is the regulator, did meet with all the credit bureaux last year in Abuja and gave instructions that regulations be followed and make the industry competitive.
At the moment how many credit bureaus do we have in Nigeria?
I am aware that at the last meting at the CBN five parties showed interest but I don't think all of them have started yet. But as far as I know we are the only functional credit bureau in Nigeria today. We started in 2003 and we have been giving credit information on individuals since then.
How acceptable is credit bureau services in Nigeria thus far?
Banks after the post consolidation exercise realised they will do business with the common Nigerian. Before now, they were more comfortable doing business with the affluent but the market was very small for all of them to compete for. The banks are giving more credit now so they need more credit information now than few years ago.
How profitable is this business to guarantee adequate return on investment to your 150 shareholders who have invested about N1 billion?
What we basically sell is credit report of individuals generated from banks or other lending outfits they had business with. And the report is paid for because we are adding value because, where as a bank may give us information of an individual based on the transactions they have had but they can get information of several other transactions of the individual elsewhere. We also sell credit scores too. So as the amount of data in our system increases, the more information we will sell and the more money we will make for shareholders. And subsequently, for best practices, soon the banks may require to obtain a credit report before processing any loan.
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