A new private Credit Reference Bureau (CRB) has been established by the African credit information company Compuscan in Rwanda. Compuscan will compile and share credit information about borrowers between banks and non-bank financial institution. The National Bank of Rwanda (BNR) has approved a three year contract with Compuscan to provide credit information to financial institutions within the country. Michael Malan, managing director of Compuscan, comments, “The principle of data reciprocity will apply. Users of data will be required to share data in order to view data ensuring fairness for all.” In 2009, the World Bank “Doing Business” Survey gave Rwanda’s credit information system a “2” out of a possible high score of “5”.
CRBs can help banks financial institutions identify potential borrowers and gauge repayment rates. In the case of Compuscan, the information will be submitted by customers, who will sign a waiver allowing the information to be released by Compuscan. Information will also be verified by the bureau. Customers will all submit their new national ID number.
Rwanda’s earlier credit bureau, the Centrale des Risques et des Impayés (CRI), was a public institution managed by the central bank. The BNR pins the blame for the World Bank’s low rating of Rwanda’s credit information system on CRI and will effectively replace CRI with Compuscan. The CRI serves most commercial banks in the country in addition to 13 microfinance institutions (MFIs). The information database contains information on 61,000 accounts possessed by 50,000 borrowers. The CRI collects information on both loan payments and loan defaults for loans over USD 881. There are no records for smaller loans.
Rwanda has a history of low loan repayment as well as a low percentage of adults utilizing bank services. According to a 2008 MicroCapital story, Rwanda’s non-performing microfinance loans stood at 13.8 percent at the end of 2007, falling to 9.8 percent by the end of 2008. Mr. Malan claims that Compuscan will help reduce non-performing loans to between three percent and four percent.
Compuscan, founded in 1994 and based in South Africa, works in 8 African countries and with 4,900 lending institutions. The company manages 58.9 million accounts and represents 21 million borrowers. Countries of operation include South Africa, Uganda, Botswana, and Namibia while countries utilizing Compuscan services include Zambia, Mozambique, Lesotho, and Swaziland. In addition to establishing CRBs, Compuscan also provides credit-related software including a credit application processing system called XCellerator, a credit decision matrix called Codix, the loan management system Proloan, and a fraud and identity management system. Additionally, Compuscan offers credit scoring and credit skills training. No financial information is available for the company.
The CIA World Factbook estimates Rwanda’s national GDP in terms of purchasing power parity at USD 9.1 billion and per capita GDP at USD 900 in 2008. 90 percent of the labor force was engaged in agriculture while agriculture constituted only 35 percent of GDP. Rwanda’s economy suffered from the 1994 genocide although the economy has been growing between 5 and 7 percent annually in recent years. In 2008, MicroCapital reported on the arrest of fifteen fraudulent microfinance institution managers following the government closure of eight bankrupt MFIs in 2006. In 2009, MicroCapital followed up with a story on depositors’ attempts to reclaim money from the MFIs.
According to the MIX Market, the microfinance information clearinghouse, the seven MFIs in Rwanda report a cumulative gross loan portfolio of USD 10.65 million and serve 50,372 borrowers. The largest MFI, Urwego Opportunity Bank , is also the only microfinance bank listed for Rwanda. All the MFIs have received a MIX rating of three diamonds or more for level of information disclosure. Every MFI was founded after 1994.
Additional Resources:
“Rwanda: Country Gets Private Credit Bureau”, Published by Symbiotics, May 2009
Compuscan: Home
BNR: Home
“Rwanda’s Microfinance Industry Struggles with Low Portfolio Qualities”, by Lori Curtis, Published by MicroCapital, December 2008
“Credit Bureaus: The Pain or Pleasure of Data Supply?”, Published by Compuscan
CIA World Factbook: Rwanda
“Crackdown on Crooked Microfinance in Rwanda”, by Melissa Duscha, Published by MicroCapital, April 2008
“Depositors in Rwanda Approach the Ombudsman’s Office for Help to Recover their Deposits From Corrupt Microfinance Institutions”, by Bharathi Ram, Published by MicroCapital, January 2009
MIX Market: Rwanda
By Goda Thangada, Research Assistant
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