Usage of the Financial Clearing Bureau (FCB) registered a 2,6% growth for 2015 compared to the previous year due to stagnated growth in the demand for credit.
BY TATIRA ZWINOIRA
In the fourth quarter report for 2015, FCB managing director Alan Goodrich said growth in the number of searches for 2015 was considerably lower than the previous year.
“In 2014, usage of the bureau grew by 12%. This had seemed to indicate that the credit providers had begun to realise the power of the tool at their disposal and FCB had geared itself up for similar growth in 2015. However, 2015 only saw a small 2,6% increase in the number of searches,” Goodrich said.
“This is despite the number of active end-users swelling by over 13% during the course of the year. The obvious explanation is simply that, with the economy struggling, the demand for credit stagnated.”
In 2015, searches on the FCB database were made by close to 110 000 individuals with no previous history, representing an almost linear growth in the FCB database from 2,29 million to 2,4 million individuals at year end.
Almost 20% of the total 560 000 searches made on the database were on “new” applicants. Zimbabwe has a young population with over 60% below the age of 24 suggesting it accounted for the high percentage of new applicants.
The high percentage of “new” searches on the FCB, in the context of only a small increase in the total number of searches, implies that credit providers were not systematically using FCB’s services for repeat business.
“This is a risky strategy or policy to adopt and could certainly have contributed to non-performing loan (NPL) rates hovering around the 14% mark, while the proportion of FCB searches that yield adverse records remains much lower at 5,7% for 2015,” Goodrich said.
“The good news is that more and more Zimbabweans are establishing formal financial identities, which will give them greater access to affordable financial services in the future, provided they keep their record clean.”
In his monetary policy statement, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said the adjudication process, has been completed for a Credit Reference Bureau (CRB), in line with public procurement rules and regulations and the contract for setting up the system was awarded to a renowned company at a cost of around $1,8 million.
He said the credit reference databank would be housed at RBZ.
“All banking institutions and micro-finance institutions will be mandated to provide credit information both positive and negative, to the databank. In terms of the model adopted by the Bank [RBZ], all private credit bureaus will be able to access, at a fee, information from the databank,” Mangudya said.