Kigali — A credit reference bureau is set to start in Rwanda in December.

The move promises to increase availability of credit and spur economic development.

The development comes when banks have become stricter on lending partly to safeguard themselves against the current global financial crisis, the liquidity problem in the country and the slow loan paying culture of Rwandans.

This means majority of Rwandans cannot access credit vital to grow businesses as banks have been tightening the lending procedures.

"Loans in Rwanda are over collateralized," said Jamie Bowman, a USAID expert attached to the National Bank of Rwanda.

"To access a loan, the bank will require your house, a car and a land title as collateral," she complained.

Bowman was part of the resource persons during a one-day conference called by National Bank of Rwanda to sensitize reporters about the need for a credit reference bureau in Rwanda

The conference was held at Laico Hotel in Kigali recently.

Officials from the National Bank of Rwanda said a credit reference bureau will trigger economic development as more people will access credit and have high purchasing power.

"More credit to more people leads to a greater demand for products, which enhances job creation," she emphasised.

The existing public bureau at the central bank is used by banks and microfinance institutions.

The database holds around 61,000 current accounts on about 50,000 borrowers in Rwanda.

Financial institutions use the information from the central bank in the credit report as part of their underwriting process.

The credit bureau might also improve Rwanda's World Bank rankings.

The 2009 World Bank's Doing Business Survey ranked Rwanda's credit information system a '2' out of a possible '5'.

CompuScan, a South Africa based company was granted a three-year exclusive right to operate the bureau.

The company promised to woo banks, microfinance lending institutions, telecom companies, utility providers and insurance companies to use the credit bureau.This means the bureau will have larger and richer data.