Up to 5 million loan defaulters to be delisted from CRBs
A day after nominating members to his Cabinet, President William Ruto made a start on the assignment to advance the economic interests of the bulk of his voter base—hustlers— by holding a convention with private sector players to map out a partnership with the government on key issues including unlocking credit for loan defaulters.
The President joined business executives from Safaricom, KCB and NCBA groups in a highlight presser where the three corporates announced the easing of the daily fee for Fuliza loans by up to 50 percent.
While making lauding the move to slash the auxiliary costs, Dr Ruto announced a plan to free roughly 5 million Kenyans from the shackles of Credit Referencing Bureaus.
“The announcements you have made here are very positive and in the right direction. I am very happy that between 4 and 5 million Kenyans will by beginning of November be out of the blacklisting, that is very important,” he said.
On a light note, the President attributed the decision by Safaricom and partners in Fuliza —KCB and NCBA— to his reproachful views on the overdraft product during the recently concluded General Election campaigns.
Read also: Hustler loans: Safaricom, KCB, and NCBA cut Fuliza rates by 50 percent
“In the last several months [during] the campaign, Fuliza was a very popular word and I am happy that you were listening and because you have made a very positive statement,” said the President.
“We wish to express our intention to work with our partners and other industry stakeholders to rethink the credit information-sharing framework that underpins Credit Reference Bureaus (CRB) to better enable Kenyans, especially Kenyan entrepreneurs, to access credit more seamlessly. The specific mechanisms for this for M-Shwari and Fuliza customers shall be announced by 1st November 2022,” said NCBA Group Managing Director, Mr John Gachora.
In September 2021, former President Uhuru Kenyatta announced a moratorium on the negative listing of borrowers with loans below Kes5 million by CRBs for a year, a move that essentially cut credit information sharing across the banking sector.
The Presidential directive, while protecting defaulters, slowed down lending, especially for individuals and SMEs which are often seen as riskier compared to big firms.
In the 12 months to March, loans issued to Fuliza subscribers totaled Kes502.6 billion highlighting the popularity of the credit facility among Kenyans.
Statistics by Metropol, one of the three licensed CRBs alongside TransUnion and Creditinfo International, revealed that the number of loan accounts in arrears for over 90 days went up to 14,035,718 by January 2021, up from 9,673,258 in August 2020.
“Obviously people are struggling with repayment even those who had restructured their loans. This is a temporary situation and I believe as the economy starts to pick up and cash flow improves people will begin to pay,” Metropol head Sam Omukoko told Business Daily early last year.
