Credit Information Systems - Egypt & Morocco

Egypt's iScore

Egypt’s first private credit bureau, iScore, became operational in July 2008, for the first time enabling comprehensive credit reporting (positive and negative data) in the country. A joint World Bank/IFC intervention responding to requests from a reform-minded Egyptian cabinet on strengthening the credit information infrastructure in the country resulted in amendments to the Banking Law of Egypt in June 2005. 

Prior to 2005, the Central Bank’s registry provided fragmented and incomplete information. The reforms arising out of the Banking Law amendments allowed the Central Bank to license and regulate private credit bureaus. Today, credit information sharing providers in Egypt are permitted to capture information from utility providers and other retailers, capture information on loans with value greater than 1% of per capita income, retain historical data for more than two years, and allow borrowers to inspect data.

Parallel to the reforms that were undertaken to develop an enabling environment for credit reporting, IFC supported the development of private credit reporting in the country, by providing technical assistance to Egypt’s first private credit bureau, iScore, over a three-year period. The three-year set up period focused on the business planning, technical partner selection, and implementation.

Results: Today, iScore includes 9 million data records compared to the 0.9 million records originally held by the Central Bank of Egypt’s public registry prior to 2005. The bureau currently services the credit information needs of 55 institutional subscribers (41 banks, 8 mortgage finance companies, 4 leasing companies, one fund) and has issued over 1 million credit reports. iScore is committed to building inclusive financial systems by incorporating credit information on consumers as well small and medium enterprises and microfinance institutions. Egypt’s reform efforts in the credit information sharing space have enabled it to progress 85 places on the World Bank’s Doing Business getting credit indicator, from 156 in 2007 to 71 in Doing Business 2010.

Morocco

Prior to 2006, the Moroccan credit information sharing infrastructure was characterized by fragmented information sharing systems, an unclear legal and regulatory framework, and lenders that were reluctant to share data. The Central Bank of Morocco (BAM) had a credit registry that maintained records on banks’ lending operations above a certain high threshold, but which was fraught with issues, ranging from data quality and scope to database design and system. As a result, the credit registry was unable meet the needs of the booming consumer credit market, which was characterized by inefficient lending processes, high collateral requirements and high non-performing loan ratios.

In late 2005, upon the request of the Central Bank of Morocco, IFC conducted and provided a market diagnostic of the state of credit information sharing in the country. Based on the recommendations from the diagnostic report, BAM enacted a new banking regulation in February 2006 empowering the Central Bank to outsource its credit reporting function to the private sector. IFC support was solicited by BAM to support the following components of developing a private credit reporting environment in the country: developing a technical and market assessment report, developing a business plan, advising BAM on best practices for creating an enabling environment for effectively regulating the credit reporting industry, supporting BAM in selecting an appropriate technical vendor, and raising overall awareness on the subject.

Subsequently BAM issued two circulars mandating financial institutions to supply data to BAM as well as the new credit bureau on a monthly basis, and to inquire about any customer using the credit bureau before granting credit. BAM also licensed the country’s first private credit bureau operator in the fall of 2007.

Results: Morocco’s first private credit bureau went live in March 2009 and provides comprehensive (positive and negative) credit information sharing, thus becoming the first country in the Maghreb to do so. To date, the bureau incorporates data from banks, microfinance institutions and non banking financial institutions. All supervised financial entities are now mandated to supply the bureau with all data on all loans on a monthly basis. As a result of all the reform efforts undertaken by the Central Bank of Morocco, the country’s now scores a 5 out of 6 on the World Bank Doing Business credit information index, up from a 1 out of 6 in 2006. The bureau currently covers about 14% of the adult population, up from the 2% coverage under the former Central Bank registry.

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