CS Ministry of East African Community and Regional Development Adan Mohamed, CEO Kenya Private Sector Alliance(KEPSA) Carole Kariuki and PS Ministry of East African Community and Regional Development Kevit Desai go through a booklet containing the reforms on how to do business during a meeting by the Government and private sector stakeholders to access post-pandemic reform achievements at Sarova Panafric Wednesday 09, September Image: WILFRED NYANGARESI Access to credit has eased in Kenya after the government implemented various reforms to ease doing business last year, according to a review.
The milestones report on the Ease of Doing Business Reforms, says the reforms have cemented Kenya’s leading position in getting credit.
In the reforms , the government recommended sharing of credit information from utility and retail companies to credit reference bureaus for credit scoring purposes.
The credit scoring allows lenders to rate all their borrowers before advancing any loans.
The report also cites the enactment of legislation allowing the sharing of positive and negative credit information and establishing guidelines for the treatment of historical data as a positive reform.
According to Nationa Treasury Cabinet Secretary Ukur Yatani, this allowed for better lending decisions as financial institutions had access to positive and negative credit information of borrowers.
The government also formulated a legal framework to enable the use of movable assets to access credit.
This eased access to credit as people could get credit from giving items such as livestock and household items as collateral.
“Previously banks only gave loans to people with land, now you can get a loan using almost any asset as collateral. SMEs are happy that they can now use even crops or livestock to access credit from banks,” said Joshua Oigara, Chairman of Kenya Bankers Association and CEO of Kenya Commercial Bank.
The move saw the number of loans issued against movable assets such as household items, crops, livestock and bank accounts increase by 61.1 percent in the six months to June.
Kenya was ranked fourth globally in 2019 on access to credit from position 13 in 2014 , according to the World Bank’s Ease of Doing Business Report.The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit.These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.The country improved across three indicators with the strength of legal rights index rising from 10 in 2014) to […]
