Friday, September 23, 2022 – President William Ruto’s promise to remove 14 million Kenyans from the Credit Reference Bureau (CRB) may be harder than anticipated.
This is after the World Bank Group (WB) slammed breaks to the move, saying it is disastrous.
In a statement, the World Bank faulted the Central Bank of Kenya (CBK) over its directive to have Kenyans with loans less than Ksh5 million delisted from Credit Reference Bureau (CRB).
The global financial group noted that the move was not only ineffective but also put credit lenders at risk.
The world lender explained that the directive hindered financial institutions from accessing the credit score of potential borrowers.
“The popularity of mobile money in Kenya, for example, has led to broader financial inclusion but also to the blacklisting of numerous borrowers for defaults on nano-loans under ksh1200 ($10).”
“One of the responses of the Kenyan regulator was to block mobile lenders from recording defaults with the credit bureau. This could be ineffective and hurt digital and conventional lenders alike seeking to understand the full indebtedness of a potential borrower without addressing the product appropriateness issue,” read the statement from the World Bank.
Further, World Bank acknowledged that digital lending had become common in the country given access to mobile lending applications. However, the financial group underlined that defaulting on loan repayment was still a big challenge.
This was explained by the fact that a majority of borrowers did not understand the terms and conditions that are set by digital lenders.
“While digital microcredit has expanded access to credit in some developing economies, countries such as Tanzania and Kenya have seen large numbers of borrowers unable to repay loans due to irresponsible lending practices,” the global financial institution stated.
The listing of Kenyans on CRB has been one of the key issues that dominated campaigns prior to the August 9 polls.
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