In a move aimed at strengthening its credit appraisal process and protecting itself from exposure to serial defaulters K–Finance Limited, one of Dar es Salaam’s fastest growing Microfinance Institutions has engaged the services of Dun & Bradstreet Credit Bureau to provide Credit Information and related Services.
Speaking on her institution’s decision to engage Dun & Bradstreet, Chief Executive Officer of K-Finance Devotha N. Minzi said, “For us at K-Finance, we believe that it is important that we make use of the best means available to protect our institution from losses caused by defaulters so that we can channel our resources at providing quality services to our customers and fulfil our vision of mentoring, coaching and empowered entrepreneurs. Also, we believe that the use of credit reports will help reduce the cost borrowing for customers who have a good record of repaying loans Having conducted our assessments, we concluded that Dun & Bradstreet is our best partner – in terms of people, skill and infrastructure required to serve us and meet our requirements. Dun & Bradstreet have demonstrated their capability and competence and we are confident that we made the right choice.”
The move by K-Finance comes just has Dun & Bradstreet recently met with Microfinance Institutions in Dar es Salaam to brainstorm on how to ensure the participation of MFIs in Tanzania’s Credit Reporting System. Speaking at the offices of K-Finance where the contract-signing took place, General Manager of Dun & Bradstreet Credit Bureau – Adebowale Atobatele said, “We would like to thank the Management of K-Finance for making what we consider to be a very intelligent and informed choice. Their decision to engage us as their Credit Reference Bureau service provider, further demonstrates the market’s confidence in our capability. We are unwavering in our commitment to delivering the best possible Credit Reporting System in Tanzania and have intitated the process of building a central data repository for MFIs in Tanzania. It is our hope that with the support and participation of other stakeholders a truly all-inclusive, fair and credible credit reporting system will be established in Tanzania in no distant time.”
Microfinance Institutions world-over are directly involved in bringing financial services to a large number of unbanked and under-banked people and have been described as one of the most effective means of deepening financial services, eradicating poverty and promoting financial inclusion.
However, analysts have said, that MFIs are more exposed to losses and have over time struggled with a high ratio of non-performing loans due to unavailability of information needed to assess the credit worthiness of borrowers and also, the general high risk nature of micro lending as a business.
It is expected that the existence of Credit Bureaus like Dun & Bradstreet will help protect and strengthen the role of Microfinance Institutions in building a strong economy.