Enhancing Credit Worthiness of small businesses
The BFP-B is improving the credit worthiness of small businesses, which enables financial institutions to reduce the cost of risk assessment and improve the risk-adjusted returns of lending and investing in small businesses.
We have done this by investing in private sector proposed commercially-viable business solutions and currently assisting the Microcredit Regulatory Authority to establish a functioning microfinance credit information bureau (MF-CIB).
Credit worthiness to increase financing for small businesses
By 2020, we expect an additional £58.88m to be made available for financing to small businesses as a result of enhancements in the credit worthiness of small business.
Assisting the microcredit regulatory authority
We are helping the government to establish a functioning credit information bureau for the microfinance sub-sector that will generate credit reports for microfinance borrowers, at least 30% of which are classified as small businesses. Improved credit histories can:
enhance the credit worthiness of microfinance borrowers
improve loan portfolio quality of microfinance institutions
create the condition for graduation of small businesses from the microfinance sub-sector to the commercial bank/non-bank sub-sector
create opportunities for the microfinance sector to secure additional capital from investors and wholesalers to expanding the size and volume of lending to small businesses
We are assisting the Microfinance Regulatory Authority with designing the software for operating the database, establishing the data management center, and building capability at the Microfinance Regulatory Authority and participating microfinance institutions to effectively manage the requirements of the CIB.
Improved credit histories enhance the credit worthiness of microfinance borrowers, improves loan portfolio quality of microfinance institutions, and creates the condition for graduation of small businesses from the microfinance sub-sector to the commercial bank/non-bank sub-sector. They also create opportunities for the microfinance sector to secure additional capital from investors and wholesalers to expanding the size and volume of lending to small businesses.
Investing in the private sector
From 2015-2019, we have invested in competitively-sourced private sector proposed business solutions that significantly reduce the cost of risk assessment by financial institutions through big-data and transaction-based alternative credit scores, as well as improved project-finance documentation of small businesses.