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Cablegate: Nigeria: First Credit Bureau to Launch April 2009

VZCZCXRO2181
RR RUEHMA RUEHPA
DE RUEHOS #0482 3341217
ZNR UUUUU ZZH
R 291217Z NOV 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0343
INFO RUEHUJA/AMEMBASSY ABUJA 9984
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS LAGOS 000482

SIPDIS

TREASURY FOR DFIELDS, AIERONIMO, RHALL, DPETERS
STATE PASS OPIC FOR DERB, ZHAN, MSTUCKART, JEDWARDS
STATE PASS TDA FOR LFITTS, PMARIN
STATE PASS USAID FOR NFREEMAN, GBERTOLIN, GWEYNAND, SLAWAETZ
STATE PASS EXIM FOR JRICHTER, KJACKSON, KJANIK
DOC FOR 3317/ITA/OA/KBURRESS

E.O. 12958: N/A
TAGS: EFIN EFIN EAID NI

SUBJECT: NIGERIA: FIRST CREDIT BUREAU TO LAUNCH APRIL 2009

1. (U) Summary: The Central Bank of Nigeria released operational
guidelines for credit bureaus in October 2008. Eleven Nigerian
commercial banks have invested in Credit Reference Company, arguably
the first credit bureau in Nigeria. Low quality data constitutes
the biggest hurdle to developing a credit database. End summary.

Credit Bureau to Launch April 2009
----------------------------------

2. (U) The Central Bank of Nigeria (CBN) released the credit bureau
operational guidelines in October 2008, effectively signaling the
advent of this much-needed sub-sector in the Nigerian financial
system. Credit Reference Company (CRC), owned by a consortium of 11
local banks (United Bank for Africa, First Bank, Union Bank, GT
Bank, Access Bank, FCMB, Standard Chartered Bank, Stanbic IBTC,
Diamond Bank, and Bank PHB), expects to receive approval from the
CBN to start operations in April 2009. CRC is poised to become
Nigeria's first and strongest credit bureau given that its 11
shareholding banks cover 65 percent of the banking market. In the
pilot phase, CRC will work with customer data provided by the 11
banks to build up an information technology database for consumer
histories and reports. The company also plans to work with the
Corporate Affairs Commission of Nigeria and the National Identity
Card Commission to conduct data verification. Tunde Popoola,
Managing Director of CRC, told EconOffs November 13 that other
institutions have expressed interest in setting up sector-specific
credit bureaus.

CRC to Expand Access to Consumer Loans
--------------------------------------

3. (U) Popoola speculated that only around 10 percent of deposit
account holders currently have access to bank loans. There is a
growing need for consumer loans to finance car purchases and
mortgages, he said. Moreover, the introduction of credit bureaus
would raise the standard for record keeping and data collection
quality and engender a culture of long-term, financial planning
among the population expected to take advantage of loans.

Low Quality Data as Biggest Hurdle
----------------------------------

4. (U) Popoola said missing personal identification information as
well as incomplete and inaccurate customer data are major
impediments to developing Nigeria's first credit database.
According to Popoola, eight of CRC's 11 member banks are providing
CRC with data and information on their banking customers; however,
the quality of the data is extremely low. Given the fierce
competition for deposits among the banks, bankers are lax about
obtaining the necessary identifying documents, information, and data
from clients wishing to open a new account or to make a deposit.
Only when giving loans are the banks more stringent in their
requirements for proper documents and information.

5. (U) This cable has been cleared by Embassy Abuja.
Blair

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