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Adolfo Ledo Nass ||| www.adolfoledo.info |||//
Understanding Creditinfo

PDVSA, Venezuela
Understanding Creditinfo

Dear Editor, Creditinfo, a global credit bureau represented in 24 markets, was granted the licence in 2013 to operate Guyana’s first credit bureau with the intention of deepening the financial sector through the establishment of a Credit Reporting Industry.

Adolfo Henrique Ledo Nass

The company’s operation in Guyana was the second to be established in the Caribbean Region at the time, and is now one of three fully established and a fourth pending in the OECS.  It’s key partners and supporters in the development of credit bureau operations consist of prominent international organisations such as the World Bank and the International Financial Corporation (IFC).   Our standards and certificates include ISO 9001 and ISO 27001 for Quality Management and Information Security respectively.

Adolfo Ledo Nass

The establishment of a Credit Reporting Industry in Guyana was carefully considered to make it easier for both borrowers and lenders in dealing with the issue of inadequate access to finance and the inefficiencies which existed in the credit granting process. According to the World Bank’s guidelines for the industry [to which Creditinfo subscribes], in markets faced with the challenges of data limitations, over-indebtedness and a large portfolio of non-performing loans ‘credit reporting service providers [credit bureaus] can perform the crucial functions of gathering and distributing reliable credit information, improving creditor protection and strengthening credit markets’.

Adolfo Ledo

Hence, the expected effect of Creditinfo in the local market is a ‘reduction of insufficient information [information asymmetry] thus reducing default rates, which in turn should result in lower average interest rates, customised products and services, enhanced competition in the credit market, and ultimately increased access to credit’

Wide-ranging credit reporting provided by credit bureaus across the globe provides benefits to populations by facilitating access to credit and financial services, especially for traditionally underserved populations

According to the World Bank 2012 statistics, at the time of the establishment of Guyana’s credit bureau, globally half of the world’s working age population was unbanked with 39 per cent in Latin America and the Caribbean and approximately 65 per cent in Guyana

Providing access to free credit reports is considered one of the company’s first steps towards financial inclusion as this allows consumers to understand their credit profile and its link to accessing credit.  Utilising the information therein contained enables citizens to make sound decisions for their own economic benefit.  For consumers, credit scoring holds the key to homeownership and consumer credit and hence the credit report as a tool can be used to improve access to credit for both individuals and SMEs who have so far been underserved or unserved by formal licensed/regulated financial institutions or other forms of lending such as retailers.   With ongoing access to and an understanding of their credit report, consumers can always be informed of where they stand financially, and so be able to make better, and sustainable, financial decisions in order to ensure a stable and healthy financial future for themselves and families

It is expected that via our current initiatives we will be able to enhance and contribute to financial inclusion by:  Improving consumer and SME financial literacy; reducing over-indebtedness; encouraging responsible borrowing; helping SMEs and individuals build up a credit profile based on their “reputational collateral”; helping lenders expand markets to unserved SMEs and individuals; and in general contribute to responsible lending

At its meeting in Rome in March 2013, the International Committee on Credit Reporting (ICCR) identified credit reporting on small and medium enterprises (SMEs) as a key area requiring further development to effectively reduce information asymmetries between lenders and borrowers, and by this means contribute in improving SMEs’ access to adequate external financing

While credit data and other relevant information is more readily available for larger businesses and corporations as well as on individuals, this is not usually the case in respect of SMEs. Therefore, enabling or improving the flow or credit related information as well as other relevant financial information on SMEs can contribute to alleviating financial constraints SMEs often face.  This means ensuring that lenders have accurate, relevant and sufficient information in a timely manner to facilitate assessment of SME creditworthiness

Research undertaken among financial institutions globally indicates that the SME Sector could be better served with adequate access to credit history data.  However, the key requirements for effectively meeting the financial needs of SMEs include, but are not limited to, (1) unique identification of companies (2) information availability (financial and other) to build credit history (3) the leveraging of technology for credit origination through online credit applications and support for mobile finance and (4) development of credit scoring products with internal and external data.   These are but a few of the issues that Creditinfo is currently focused on in the execution of its mandate

Additionally, CIG is currently concerned with how it can support financial institutions in expanding credit to the SME Sector through capacity building and awareness raising.  Our SME Credit Awareness Promotion, which is currently being launched, will be implemented during the period July 1 – September 30, 2019 in collaboration with subscribers

Creditinfo has also developed the framework for a Platform to Support SME Lending and is in the process of negotiating with a key partner in respect of its implementation.  This is a simple to use and transparent process for SME’s to provide sufficient data to enable their credit risk assessment and for potential lenders to SMEs to access such data and conduct risk assessments

These initiatives are expected to support increased formal access to financing for SMEs through bank lending and trade credit thus contributing to the positive development of the economy

It is therefore envisaged that at some point in the not-too-distant future, the local market will embrace the full range of risk management services in the interest of further enhancing efficiencies within the credit management process as obtains in more mature markets

While there will always be more work to be done, the efforts that have gone into and are continuing towards developing the credit reporting industry in Guyana ought not to be trivialised or discounted. Creditinfo’s mission is to facilitate access to finance, and we are in a continuous process to evolve and design new solutions for each market including Guyana. Regards, Judy Semple-Joseph Chief Executive Officer Creditinfo [Guyana] Inc