LICENSING of two private Credit Reference Bureaux (CRB) by Bank of Tanzania (BoT) will help to reduce lending interest rates although more needs to be done to tackle defaulters.
The Barclays Bank Tanzania Managing Director, Mr Kihara Maina, commended the central bank for licensing operators of CRB who will help banks to identify clients before extending loans. "Introduction of Credit Reference Bureaux is welcome.
However, the key issue is to change the behaviour of most of our borrowers and potential borrowers in meeting their financial obligations," Mr Maina said. He said default rates were still high and cannot be erased by the CRB introduction only, but other factors such as being able to identify potential borrowers not only by their credit history but also their other credentials.
"In this case, the national identity card is an important document which will make an easier reference point at the time of credit checks," the Barclays Bank chief noted. The bank has nine per cent default rate of clients from all segments of borrowers.
Last December, BoT licensed two private CRB operating firms, Credit Info Tanzania Limited and D&B Tanzania Limited, both based in Dar es Salaam.
Speaking during a World Bank convened meeting on Stakeholders credit information sharing, Ade Abetole of D&B and Vedarson Vedar of Credit Info pledged to observe ethics and avoid a repeat of lip offs experienced in some African countries such as Uganda where fees were charged in dollars.
"We are not going to charge in dollars because we are working in Tanzania, we will charge in shillings only," said Mr Abetole assuring the public and bankers that prices for the service will be kept as low as possible. Abetole said D&B Tanzania which is a subsidiary of United States based Dun & Bradstreet, will maintain international standards of the highest degree arguing that CRB are there to, 'Fight poverty and spur growth.'
Credit Info's Mr Vedar also pledged to play by the rules and assured clients of gradual lowering interest rates charged on loans. "This initiative by the central bank must be commended because finally we have credit reference bureau services in Tanzania which means a lot to the economy," he noted.
International Finance Corporation (IFC) and Swiss State Secretariat for Economic Affairs (SECO) are since 2009 sponsoring a credit reporting and sharing information programme known as Africa Credit Bureau Programme for Tanzania.