Latest update March 29th, 2024 12:59 AM
Jul 17, 2016 News
Three years later, an initiative that would have seen a major shift in the way Guyana handles its lending market is struggling but the local managers are hoping for a change in fortunes.
CreditInfo Guyana was licensed in 2013 following the passage of the ground-breaking Credit Bureau Act in 2010.
The introduction would suppose to see lenders like the commercial banks using a customer’s credit history report in determining if and how much to lend.
In essence, the bureau gathers credit data on persons and provides these to the lending agency.
Over the years, lending was largely dependent on tenure of service, assets and how much money one has in the bank that could be used as collateral.
But the introduction of the CreditInfo Guyana three years has failed to dent the way Guyana does business.
According to Judy Semple-Joseph, Chief Executive Officer of the bureau, the uphill climb has been tough with the entity not making money. As a matter of fact, the entity has invested almost $200M but over the last three years only managed to rake in about US$70,000 ($14M) income over the period.
The good news is that following amendments to the legislations, aggregated income was approximately US$50,000 for the first four months of 2016, so things are looking up.
Currently, the bureau has managed to acquire 300,000 credit records. For the entire 2015, the credit records in the database numbered 84,000, a major improvement.
While the first two years saw no banks or companies using CreditInfo, this saw a turn last year when over 13000 credit reports were pulled.
For the first quarter of this year, some 4,300 reports were used. So far for this year, over 11,000 reports have been pulled.
According to a report of CreditInfo, there was unacceptable progress during the first two years with evidence suggesting that although it reports were used during that period, there was only a small portion of issued loan.
The report went further, noting that lenders in Guyana are losing money due to higher credit risk with borrowers not benefitting from their good credit history.
“The economy as a whole did not benefit from an acceptable ranking in the “Doing Business report.”
CreditInfo had envisaged that the introduction of credit bureaus should raise the ratio of private credit to GDP by seven or eight percentage points over a five-year horizon.
Three years since the bureau came into being, access to credit still remains a major hurdle for a big part of the population.
Regarding financing to continue its operations, the report said that the credit bureau is losing money and there is difficulty in convincing initial investors.
Creditinfo Group hf. was established 1997 in Iceland and currently operates 20 subsidiaries/affiliates with 300 employees in more than 29 countries.
The entity is now examining options of financing including approaching stakeholders to buy-in to the operations. Later this month, on July 27, the bureau is planning to host an outreach with plans to expand access to small enterprises.
The bureau will especially by paying attention to insurance companies; credit unions; hire purchase companies and trade creditors to expand it database and services. CreditInfo is regulated by Bank of Guyana with strict laws governing the confidentiality of the information, including a legal requirement for the data subject‘s consent before the information can be shared.
According to the bureau, it is an independent organization that collects, stores, and organizes credit information about consumers and businesses.
This information is sourced and collected from lenders such as banks, credit unions and microfinance organizations, as well as providers of various alternative types of credit such as hire purchase companies, telecommunication companies, and utility companies such as Guyana Water Inc. and Guyana Power and Light Co.
“These disparate data are then subjected to a rigorous process of matching, cross-checking, merging and analyzing. Everything possible is done to ensure that the information is accurate and relates to the specific data subject,” explained Semple-Joseph.
Credit bureaux are important elements of the financial infrastructure that facilitate access to finance. Easier access to finance is a significant driver of economic well-being in any country, but more particularly for those countries in the developing world such as Guyana.
Today, less than 25 percent of the people living in developing countries have access to formal financial services, compared to up to 90 percent in developed markets. Financial sector development is seen to empower the productive power of businesses and bring the informal sector into the formal economy, a very necessary process.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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