Banks and Microfinance Institutions share data that will increase lending volume and improved access to financing, at lower credit risk in the Mozambican market
Maputo, December 2018 – Bank of Mozambique authorized Compuscan and Scoresharp to operate as the first private credit reporting system (Credit Bureau) in Mozambique. This new service will lead all Commercial Banks and Microfinance Institutions (MFIs) to share data on loans made in the Mozambican market, and may include other credit providers, such as telecommunications, retailers, utilities, insurance, amongst others in the market.
This service will be supervised by the Bank of Mozambique and will be assisted by the Mozambican Bank Association (AMB – Associação Moçambicana de Bancos) and the Mozambican Microfinance Association (AMOMIF – Associação Moçambicana dos Operadores de Microfinanças) which responds to the legislation introduced in Mozambique in 2015.
What a Credit Bureau Does
A Credit Bureau, such as Compuscan, is essential for well-functioning credit markets. They allow lenders to better assess and manage risks, help borrowers to gain access to finance are believed to help reduce over indebtedness.
Credit bureaus provide the financial sector with secure data, a centralised database of consumer and business information, and provide products and services that help predict risk and reduce fraud; such as credit reports, credit scores, identity checks, accessibility assessments, and collections. The credit bureau data is highly protected, and its access is strictly regulated by legislation.
Benefits of Credit Bureaux
Benefits of information sharing include an improved pool of borrowers, reduced default rates, and lower interest rates.
This new service will generate detailed and confidential credit information that will enable banking, and all other credit granting institutions to discriminate good customers from bad ones. Predicting and mitigating default events is at the core of credit risk management. In partnership with Scoresharp, Compuscan is able to deliver accurate predictions, risk management solutions, scorecards and analytical modelling.
By having the access to credit information, lenders are able to grant credit quicker, improving the customer experience. The faster and easier processing of credit applications enabled by credit bureaus encourages the consumer to access financing, which in turn contributes to financial inclusion and economic growth.
Compuscan’s credit reports include both positive and negative information which enable responsible borrowers to document good credit histories. These credit histories also help to build “reputation collateral”. A borrower’s “good name” (reputation collateral) provides an incentive to meet commitments much the same way as does a pledge of physical collateral. In segments of the credit market where physical assets are limited – such as consumer lending microenterprise and small business lending – reputation collateral is particularly important.
Currently, the activity of credit reporting is carried out by the Central Bank, known as a credit registry and is used for supervision purposes. Compuscan, as the first private credit bureau will provide services to all credit providers for all sectors of the economy. Banks and credit providers use this credit information sharing system to share data from their credit portfolios to addresses the fundamental problem of credit markets: asymmetric information between borrowers and lenders that leads to adverse selection and moral hazard.
According to the World Bank, countries that include a broad range of creditors who share information, not only to banks, perform better in credit and thus improve the Doing Business Index. Mozambique will improve its index with the beginning of this activity in the country.
Besides Mozambique, Compuscan is present in South Africa, Uganda, Namibia, Ethiopia, Botswana and Lesotho. This activity is also being performed in other African countries such as Kenya, Zambia, Tanzania and Malawi.
“As institutions become more confident with the lending based on the information presented, it is anticipated that new lending services, such as larger loans with less collateral request or even without guarantees, may emerge in the Mozambican market,” said Lara Cangi, Compuscan´s representative in Mozambique.
“Compuscan Mozambique is looking forward to contributing to the financial and economic goals of the Government and Central Bank of Mozambique. Compuscan hopes to establish a long-standing relationship with all stakeholders of the financial, credit and related business industries in the country with the aim of growing their businesses and the industry. We want to bring confidence to the Mozambican market,” says Lara.
“Empirical evidence shows that the presence of private credit bureaus is associated with broader credit markets (increased lending volume and improved access to financing) and lower credit risk,” says Pedro Coutinho, CEO Source Capital.
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About Compuscan and Scoresharp
Established in South Africa in 1994, Compuscan was the country’s first credit bureau to pioneer both positive and negative data for the microfinance sector, providing vital assistance at a time it was most needed. Compuscan has since become a key player in this sector and grown into a company that operates across nine countries offering credit and information services, decision analytics services, marketing services, loyalty & rewards solutions, and training.
Compuscan’s decisioning and analytics services are powered Scoresharp, a data and analytics company specialising in scorecards, predictive modelling, risk management, and analytical consultancy services established in 2007. In 2011, Compuscan acquired shares in Scoresharp and since then, both companies have been able to grow the services that they offer the finance, credit and retail industries, amongst others.
Their insights and solutions empower a global client base in prospecting, acquisition, consumer management and collections. The industries in which Compuscan currently operates include credit providers and banking, microfinance, retail, manufacturing, logistics and transport, travel and leisure, utilities, and telecommunications.
Their expansion into Africa and ASEAN is supported by more than 400 employees in South Africa, Namibia, Uganda, Botswana, Lesotho, Mozambique, Ethiopia, the Philippines and Australia.
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About Source Capital
Source Capital started in Mozambique in 2015 and is an Independent private equity and investment management services boutique with specific focus on Financial Services, Real Estate and Energy.
Lara Cangi, Representative of Compuscan in Mozambique, Compuscan – Credit Information System S.A., [email protected] , +258 843057117
Afonso Vaz Pinto, JLM&A Moçambique | +258 84 448 48 82 | [email protected]