CREDIT Reference Bureau Africa-TransUnion has launched the credit risk scoring mechanism on the Zambian market following demand by credit providers.
The Credit Risk Score (CRS) is aimed at giving an opportunity to credit providers to extend credit beyond their limit to lend and be objective in their assessment.
Launching the Score in Lusaka, Bank of Zambia (BoZ) Governor Michael Gondwe praised TransUnion for seizing the opportunity to develop a customer’s scoring mechanism that would contribute to enhancing the financial information infrastructure and facilitate fair access to credit.
He said the introduction of the CRS would not only enrich the value of its credit reports to the lenders but greatly improve the lender’s credit risk management.
Dr Gondwe also said the BoZ had developed two draft bills aimed at promoting a conducive environment in the financial sector.
In a speech read on his behalf by assistant director examinations and surveillance Mbinga Kafunya, Dr Gondwe said the major initiative in this regard was the review of the financial sector legal and regulatory framework.
“This includes the comprehensive review of the financial sector laws and regulations. In respect to financial information infrastructure, BoZ has developed two draft bills for Government’s consideration,” Dr Gondwe said.
The two included the Credit Reporting Bill which was meant to be a comprehensive law on credit reportingand Personal Property Security Interest Bill aimed at establishing a registry for movable assets that have been pledged as security.
The BoZ would continue to support market growth as well as market players in the development of an all-encompassing credit reporting.
Dr Gondwe said this would undoubtedly increase the supply of credit to the private sector to support Zambia’s growth and development as outlined in the Vision 2030.
“More importantly increasing supply must go hand in hand with affordable cost of credit. Above all, this credit must be destined to productive sectors of the economy to make a difference to an all inclusive growth,” he said.
It was important to note that the CRS was a powerful indicative tool as it was a summary of a comprehensive evaluation of the borrower’s credit worthiness expressed in a numeric term and provided the lender with an easy mechanism to make decisions in respect to the borrower.
“It also allows the borrower to easily determine their own creditworthiness based on a score. The Credit Scoring system however does not negate the need for lenders to conduct further credit evaluations if the case requires,” he said.
And Trans Union head analytist Mattys Swawenopoei said the bureau had in excess of 1.4 million credit records on file with 780 000 credit active consumers with a total credit exposure of K 155 billion.