Kenyans that have their credit data visible within Credit Reference Bureaus(CRBs) rose to 25 million in 2022, made up of 19 million active records while the 6 million individuals are visible but do not have any credit facility.
“Kenyans that are eligible for credit and are over 18 years old, are about 30 million, so we have about 5 million Kenyans that are not credit visible within the bureaus. We have between 19 million and 25 million bracket or about 6 million Kenyans that are underserved-those that are visible but do not have any credit facility,” said Morris Maina, TransUnion Kenya Chief Executive Officer in an interview with Kenyan Wallstreet.
TransUnion Kenya is one of the mandated Credit Reference Bureaus in Kenya out of the three licensed in Kenya. The firm plays a central role in driving financial inclusion through credit access. Its typical core role as a bureau is to present credit data to the entire financial ecosystem across all the verticals so that lenders can make sustainable and prudent lending decisions.
Maina said that while Kenya’s financial penetration and inclusion levels are impressive, there is still immense opportunity for the entire financial ecosystem and stakeholders-including Government, lenders and the regulator to drive and further deepen financial access.
Kenyans with access to financial services rise to 88%
Available figures indicate that Kenya has one of the most vibrant financial services sectors in Africa. According to Kenya FinAcess report, 2022, the country has financial inclusion at 83% from a formal financial sector perspective and about 88% if the informal financial sector access is added to these numbers.
“This is massive and a good starting point. The level of financial inclusion in Kenya is extremely high with only about 11% Kenyans still locked out from formal and informal financial services. Alot of these achievements in financial inclusion has to do with mobile digital credit that has been transformative to individuals and small businesses. The depth of this financial inclusion in Kenya presents an opportunity. If you think of the data that bureaus hold, like Trans Union, we probably have about 25 Million records of consumers, that is visible within the credit reference bureaus. About 19 million are credit active records while the rest could be credit inquiries,” said Maina.
Kenya has made progressive steps in developing its CRB infrastructure.
Maina recalls that in the late 2008s, the law required that financial sector players only submitted negative data to credit reference bureaus and hence the term blacklisting. Bureaus were seen as holders of bad news. In 2013, there was a change in legislation to allow lenders and institutions were allowed to share both positive and negative data. Bureaus are now enablers with positive data within them becoming reputation collateral for those individuals and that is used to deepen and give credit.
“In 2022, we had the entry of a credit repair framework that was launched towards the end of that year, in October 2022. This set up gave credit repair relief to mostly mobile or digital loan borrowers who were on NPL radar of lenders and thus these Kenyans had negative data within the CRBs,” said Maina.
Lenders were able to come through with discounts, at a minimum of 50% and six months to repay the loan by distressed borrowers.
“About 5-6 million Kenyans had the opportunity to repair their credit standing, to be mainstreamed and therefore continue accessing credit facilities as normal borrowers,” said Maina.
The Kenya Kwanza administration’s creation of the state-sponsored Hustler Fund is viewed as a significant contribution towards increasing the level of financial inclusion in Kenya.
“The Hustler Fund is transformational by giving access to even those who are not credit visible-over 6 million Kenyans. The fund aims to bring more people into credit visibility and then open more credit opportunities. The micro-credit product of the Hustler fund targets small businesses, a segment that has in the past been excluded. We have about 8 million MSMEs in Kenya with 90% of them not formally registered. So the bureaus can only accommodate 600,000 MSMEs and so there is massive opportunity still for the bureaus,” said Maina
Figures indicate that MSMEs contribute about over 40% of Kenya’s GDP with higher employment numbers. This sector is still not well covered within the CRB framework.
“Thus, those Kenyans accessing the Hustler fund will in future be mainstreamed into the credit information sharing framework so that there is sustainability. Government stimulates, then sustainability happens and awareness grows as Government sets the right tone,” said Maina.
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