Prsentation PowerPoint

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Microfinance Information Sharing Intiatives in
West and North Africa
Public Policy for Credit Reporting Systems
Strengthening Public-Private Dialogue and
Partnership Conference Beijing, China China W
orld Hotel September 28-30, 2004 Sarah Tsien (fo
r Arnaud Ventura)
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Part I. Credit Bureau in Benin Part II. Cre
dit Bureau in Morocco Part III. Comparison P
art IV. Perspectives for China

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Part I Centre des Risques in Benin (est. 2001)
A success case
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I.1 Poverty Microfinance in Benin, West Africa

• 6.5 million people 44 under 1 per day.
• Informal sector 71 GDP
• Most of the population in rural areas
• Microfinance
• 400,000 MF borrowers (10 penetration rate)
• Credit volume 47.6 M EUR
• Growing problem of non-repayment some clients
  borrow from one MFI to repay a loan at another
  
• Over-indebted micro-entrepreneurs
• Defaulting clients
• Arrears and portfolio at risk at MFIs

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I.2 Objectives of the Credit Bureau in Benin

• A database allowing MFIs to share information
  on defaulting clients
  
• Its Good for MFIs
• Early detection of borrowers default likelihood
• Reduced occurence of clients loan multiplicity
• Opportunity to develop an adequate system of risk
  management
  
• Its Good for Borrowers
• Eventually encouraged to avoid overindebtness
• Learn that building and maintaining a good credit
  history pays off
  
• Its Good for Policy Makers, Donors
  Researchers
  
• Get information about the quality of the Benin
  microfinance sector borrowers behaviour  
  

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I.3 Implementation of the Credit Bureau Project

•  Project Background
• Start of cooperation among local MFIs since 2000.
  Completed  Pilot Phase 
  
• Led by PlaNet Finance and Care International
  Benin. Currently in  Replication Phase 
  
• Financial support from the World Bank since 2002.
  (80.000 USD from Dev Marketplace)
  
• Project Management
• Operational unit
• Technical/administrative implementation and
  maintainance
  
• Management Sub-committee oversees the project
• Composed of representative members (PF, Alafia,
  CARE, PADME)
  
• Ministry of Economics and Finance participates,
  gathers monthly
  
• Monitoring and Evaluation
• National Steering Committee
• (Consortium Alafia, Cellule de Microfinance, CAT,
  UNDP, MicroStart program, World Bank, la BCEAO,
  PlaNet Finance, CARE BENIN and a few MFIs)
  
• will help to scale-up the project at the national
  level and ensure its sustainability.

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I.4 How does it work ?

• At the beginning of each month, MFIs list any/all
  clients whose loans are 30 days overdue in a
  template document
  
• Data include personal/activity information,
  number of previous current loans...
  
• The file is sent to the Credit Bureau in Cotonou
• The coherence of the information is verified and
  date are consolidated in a database
  
• Member MFIs can browse the data using a personal
  password on the Credit Bureaus webpage
  

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I.5 IT Applications to Access Credit Bureau Data

• Internet
• Secured access
• Research by keywords (client name, location,
  field of activity, MFI)
  
• Statistics
• CD-Rom
• At the end of each month, the database is burned
  on a CD-Rom
  
• Allows MFIs deprived of Internet connection
  browsing data from their PC
  
• Distributed to MFIs on written demand
• PDA (Personal Digital Assistant)
• For credit officers in the field no need for
  heavy computer / Internet
  
• PDA provided by Publisoft
• Access to information in the same conditions as
  on the Internet
  

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I.6 Impact
As of end of July 2004, the Credit Bureau was
providing data about 3,758 borrowers
with Over 15.000 monthly consultations
Clients are more disciplined now that they know
that were checking the Credit Bureau -
Microfinance Manager
Number of applications rejected ( of total MFI
portfolio)
No data provided
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I. 7 Challenges for Sustainability

• Financial sustainability
• How to move towards self-financing?
• Fees from participating MFIs? MFIs
  contribution suscription fee monthly
  participation
  
• 40 members expected by 2005 ? positive cash
  flow
  
• Institutional sustainability
• How to move from pilot project to independant
  permanent structure
  
• Maintain the rate of participation of MFIs
• Managerial sustainability
• A local management Team has been recruited and
  trained by PlaNet Finance and CARE
  

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Part II National Loans Register in Morocco
A newer project
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II.1 Poverty Microfinance in Morocco, North
Africa

• 32 million people 35 under 1 per day.
• Informal sector 18 GDP in 2000
• 45 of population in rural areas
• Microfinance
• Twelve MFIs grouped into FNAM.
• 3 Major MFIs have more than 100K borrowers each
• 70,000 loans granted monthly, average loan amount
  350
  
• Industry regulated by Central Bank Of Morocco.
  MFIs could be approved for official  bank 
  status soon
  
• MFIs are currently managing single loan products,
  but the Central Bank will allow MFIs to sell
  housing finance loans soon
  
• Until now, there was no Credit Bureau or Credit
  Register active in Morocco.
  

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II.2 What will the NRL do?

• A centralized information source for active
  and historical loans, specifically targeted at
  the microfinance industry
  
• Its Good for MFIs
• will assist the lender against poor credit
  granting decisions
  
• when taking legal action against defaulting
  clients, lenders will be able to prove they took
  a diligent decision to grant credit
  
• Its Good for Borrowers
• Helps borrowers take only the credit s/he can
  afford
  
• Its Good for Regulators
• All MFIs will be required to register with the
  NRL
  
• NRL will help the Central Bank of Morocco enforce
  all rules and regulations to meet the
  governments regulations

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II.3 Who Will Play what Role to make the NRL work?

• Experian-Scorex is the Information Broker
• providing access to the NLR maintaining the
  database.
  
• does not enforce the rules of access or uploading
  of data, but facilitates the technical aspects of
  the National Loans Register
  
• provides specialised tools to assist lenders when
  granting credit.
  
• IFC, PlaNet Finance and DAD
• will help create the necessary framework for ES
  to operate at exclusive level with MFIs in
  Morocco.
  
• later will fund a study to design the NLR and act
  as advisors to Central Bank of Morocco to create
  the conditions to enlarge the access to NRL to
  other financial institutions
• Ultimately, the MFIs must
• Contribute to and use the NRL on a regular basis
• One local partner must manage the Credit Bureau

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I.4 How does it work ?

• All loans that are currently open must be
  submitted to the NLR as a batch
  
• Users can engage through
• 1) Registration, 2) Enquiry, 3) Update
• Experian-Scorex guarantees no start up cost, no
  fixed costs
  
• 3 year exclusive contracts
• 700,000 enquiries guaranteed Y1 at 50 per
  enquiry
  
• The NRL then provides a Credit Bureau score,
• an Anti Fraud system, and a Loan monitoring
  service.
  
• (Access granted to all MFIs)

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II.5 Modes of Access to the NRL of Morocco
Lenders may access through a number of ways
Internet Experian-Scorex Internet GUI, a web-e
nabled application allowing lenders to perform
on-line enquiries, loan registration, and
register repayment. or through Data-matching bas
ed on ID number only Offshore Credit Bureau s
ite (i.e. Monaco) Data Transfer (no interact
ive connection needed)
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II.6 Upcoming Phases and Long-term Sustainability

• Project Phases
• Terms of reference definition and validation
  May 04
  
• Software development contract signature June
  04
  
• Applications Development and testing September
  04
  
• Deployment with 3 pilots November 04
• Generalization to all MFIs February 05
• Systems Establishment and Sustainability
  Factors
  
• Dedicated local partner
• Full time technical and administrative employees
  
  
• Professional and adequate offices
• System hosting in an environment with security,
  confidentiality and performance measures
  
• Continued Support to end-users thru a help-desk
  
  
• Level of service improvement through frequent
  reviews with MFIs
  
• Deployment of software needed to extract loan
  data from MIS of by the MFIs (especially MFIs
  with no IT expertise)
  

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Part III Comparison of Benin vs. Morocco
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Part IV Perspectives for China
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Questions? Thank You! Arnaud Ventura
CEO of PlaNet Finance aventura_at_planetfinance.or
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