The banks in Kenya now have credit bureaus with which they share negative debtor information; an information sharing systems is even backed by legislation. Some larger corporate make use of credit bureaus when making credit decisions. One credit bureau Metropol East Africa has a service for rating SME’s to help them access credit from bigger organizations. These efforts are largely employed by the larger corporates in the formal sector.
SME’s also face major credit risks from other SME’s and larger corporates mainly arising from overdue receivables, bouncing cheques and outright default. Defaulter will leave a long chain of victims in their wake and will go on until they get exposed if ever. SME’s therefore need an information sharing system as a risk mitigation method. Such a system would have to be managed by a third party with the requisite knowledge, skills and capacity. Such third parties do exist in the form of credit bureaus but their focus as mentioned above is on the larger corporates.
The market is ripe for an SME focused credit bureau where business can list or share details of bad debtors and serial bad cheque issuers.