Presidential Enabling Business Environment Council (PEBEC) has endorsed a Senate bill that seeks to provide a legal framework for Credit Bureau Services (Credit Bureau Bill – CBB) in Nigeria.
Sponsored by the chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Rafiu Adebayo Ibrahim, the bill would facilitate access to credit for MSMEs.
Secretary to PEBEC, Jumoke Oduwole, said last week at a public hearing on the bill that even though there was currently a CBN guideline regulating the operations of Credit Bureaus in the country, it was crucial to back their services by law.
“This will facilitate credit information sharing between the Credit Bureaus and lenders such as banks and other financial institutions; inevitably lead to an increase in the availability of credit and ultimately reduce cost,” she said.
If passed, the Credit Bureau Reporting Bill 2016 would lead to an improvement in Nigeria’s World Bank Doing Business rankings under the “Getting Credit” indicator. Last year, the World Bank informed the Nigerian government that in order for the country to be ranked on that indicator, borrowers must be able “by law to have the right to access their data in a credit bureau or credit registry.”
In her endorsement, Oduwole appealed to the lawmakers to work towards the gazetting of the bill by the end of March so that Nigeria could meet the World Bank’s deadline for its rankings this year.
“We are appealing to the Senate Committee to use its good offices to facilitate the expeditious passage of the Bill in both Houses, and the gazetting of the Bill by the end of March,” she said.
Oduwole, who also serves as senior special assistant to the President on Industry, Trade and Investment, recommended some modifications to the draft Bill.
According to her, it is a cause for concern to mandate Credit Bureaus to have offices in all states of the federation, as this will lead to the fragmentation of data, and would be a direct contradiction of the reason for establishing a credit reporting system.
She added that this was also not in line with international best practice. Also, the minimum capital requirements of Credit Bureaus should not be put in the Act, but “retained in the CBN Guidelines, so that they may easily be changed as may be prescribed by the CBN from time to time.”
Speaking at the hearing, Senate president, Bukola Saraki, said the Senate was prioritising issues around enabling the business environment. Saraki, who was represented by majority leader, Ahmed Lawan, said the Bill “would improve the lending environment in Nigeria and significantly reduce issues of non-performing loans.”
Credit Bureaus are agencies which collect and retain credit data, and score individuals and businesses based on information obtained about their borrowing and loan-servicing habits. The ratings help lenders make reasonable judgement on whether to extend credit to the prospective borrower or not.
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