On 8th November 2024, Dun & Bradstreet Credit Bureau, in collaboration with the Tanzania Association of Microfinance Institutions (TAMFI), hosted a webinar on the critical topic: “The Role of Credit Reference Bureaus in Supporting Microfinance Institutions.” The session, held from 10:00 am to 12:00 pm, aimed to shed light on how Credit Reference Bureaus (CRBs) enhance the operations of Microfinance Institutions (MFIs) in Tanzania.
CRB compliance is mandatory for all financial institutions in Tanzania, as regulated by the Bank of Tanzania (BoT). This includes submitting client data and subscribing to at least one credit bureau. Dun & Bradstreet Credit Bureau Tanzania Limited, an international company with over 30 years of experience in data processing, spearheaded the discussions, offering valuable insights into the role of CRBs.
Key Benefits of CRBs for MFIs
During the webinar, Dun & Bradstreet’s Marketing Manager, Daniel Machumu, outlined the advantages of CRBs in supporting MFIs:
- Controlling bad loans through accurate credit information.
- Bridging the information gap between lenders and borrowers.
- Promoting discipline and responsibility in the credit market.
- Reducing costs and time spent by lenders in gathering borrower data.
- Simplifying credit access for small entrepreneurs.
- Enabling borrowers to use their credit history as collateral for loans.
Mr. Machumu also highlighted CRB stakeholders, including financial institutions, government bodies like BoT and TRA, employers, insurers, landlords, and clients.
Regulatory Requirements
Silas Mahalu, a data analyst from Dun & Bradstreet, emphasized that according to BoT guidelines, all registered financial institutions must submit client data monthly, using a standard template provided by the Central Bank. This submission, due on the 20th of each month, is vital for ensuring compliance and supporting data-driven credit decisions.
Insights from TAMFI
TAMFI’s CEO, Ms. Winnie Terry, stressed the importance of combining CRB tools with traditional risk management methods such as guarantor verification, home/business visits, and adherence to the “5 Cs” of credit (character, collateral, capital, capacity, and condition). This holistic approach helps reduce defaults and mitigate risks associated with client over-indebtedness.
The webinar underscored the transformative potential of CRBs in fostering transparency, enhancing creditworthiness, and improving lending practices, ultimately contributing to the growth and stability of Tanzania’s microfinance sector.