1. Ease of Doing Business Initiative in Eastern and Southern Africa
Maputo, Mozambique, June 30-July 1, 2014
Alejandro Alvarez de la Campa
Global Product Leader STCR
Impact of Financial Infrastructure (Credit
Bureau and Collateral Registries) in Access
to Finance: A look at Sub-Saharan Africa
Access to Finance, IFC

2. The World Bank Group

3. IFC ACCESS TO FINANCE PROGRAM IN AFRICA: THREE
PILLARS
Programs aimed at increasing
financial access to a diverse
range of financial services for
low income individuals, small-
scale entrepreneurs and
farmers.
Microfinance
Mobile Financial Services
Insurance
Benin, Burkina Faso,
Cameroon, Cote d’Ivoire,
Democratic Republic of Congo,
Mali, Nigeria, Rwanda,
Senegal, Tanzania, Zambia.
Programs aimed at
strengthening capacity of
banks and FIs to serve the
SME market, low income
housing market, agricultural
sector and women
entrepreneurs.SME Financing, Climate
Change, Housing Finance,
Agrifinance, Leasing, Women
in Business, ESRM.
Botswana, Burundi, Ghana,
Kenya, Mozambique, Nigeria,
Rwanda, Sierra Leone, South
Africa, Tanzania, Uganda,
Zambia.
Programs aimed at
strengthening the foundation of
financial systems, including
institutions, information
technologies, and rules and
standards for financial
intermediation.
Micro Retail
Credit Bureaus
Collateral Registries
Burundi, CEMAC, Ethiopia,
Ghana, Liberia, Malawi, Sierra
Leone, South Africa, South
Sudan, Tanzania, UEMOA,
Zambia.
Core Banking
Financial
Infrastructure

4. 1. Why IFC’s
Focus on
Financial
Infrastructure?:
Clear Market
Failure in Africa

5. 5
1. Why is IFC
Focusing in this
Area?: Clear
Market Failure
SME FINANCE GAP
400 million SMEs in developing world
50% unserved or underserved
14% with loan or line of credit
GAP – Between US$
140-170 billion

6. COLLATERAL GAP
Source: World Bank Enterprise Surveys
Mismatch between assets owned by companies and
collateral required
44%
34%
22%
Vehicles/machinery/equipment
Accounts Receivable
Land / Real Estate
73%
27%
Land / Real Estate Movable property
Capital Stock of Firms Collateral Taken by FIs
CREDIT BUREAU DATA SERVES AS
REPUTATIONAL COLLATERAL

7. Source: World Bank Doing Business 2014
LAGGING BEHIND IN GETTING CREDIT INDICATORS
Borrowers and Creditors Right Index (0-10)
OECD 7
Europe &Central Asia 7
East Asia & Pacific 7
Latin America &
Caribbean
6
South Asia 6
Sub-Saharan Africa 6
Middle East & North
Africa
3
5.9
7.7
9.9
19.7
33.4
37.5
66.7
3.5
0.6
1.7
9.6
6.6
31.2
59
0 10 20 30 40 50 60 70 80
Sub-Saharan Africa
South Asia
Middle East & North Africa
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
OECD
Percent of Adults
Average Bureau Coverage (% of adults)
2005
2014

8. WEAK CREDIT INFORMATION SYSTEMS

9. 2. Potential
Impact of
Financial
Infrastructure
Reforms in Access
to Credit

10. •BENEFITS OF A SOLID SECURED TRANSACTIONS SYSTEM
10
• PROMOTES CREDIT
DIVERSIFICATION
• INCREASES MARKET
COMPETITION
• REDUCES THE COST
OF CREDIT
• INCREASES ACCESS TO
CREDIT REDUCING THE
RISK OF CREDIT - Underserved
MSMEs and
women
entrepreneurs
- Promotes risk
management,
prudent lending,
reduces NPLs
-
- Better
interest rates
- Move from
informal to
formal financing
- Cost savings for
businesses
- Credit risk
diversification:
immovable and
movable
- Sector
diversification in
the portfolio
- Development of
industries
(factoring and
leasing)
- NBFIs
BENEFITS OF A SOLID FINANCIAL INFRASTRUCTURE SYSTEM

11. Variable Effect
Access to finance 8 percentage points
Access to a loan 7 percentage points
% of working capital
financed by banks
10 percentage points
Interest rates 3 percentage points
Loan maturity 6 months
11
Study also provides evidence that the impact of the introduction of movable
registries on firms’ access to finance is larger among smaller firms, who also
report a reduction in subjective, perception-based measure of finance
obstacles.
Collateral Registries for Movable Assets:
Does their Introduction Spur Firms’ Access to Finance?
by Inessa Love, Sole Martínez Pería and Sandeep Singh

12. 3. IFC’s
Financial
Infrastructure
Programs:
Business and
Delivery Model

13. IMPACT / RESULTS: (1) Value of financing facilitated through
collateral registry or credit bureau (US$) and; (2) Number of
Firms/MSMEs and households with increased access to credit
Clients
Governments
(Central Banks,
Ministry of
Finance/Economy/
Justice/Trade)
Beneficiaries
Financial
Institutions, NBFIs,
Firms (mostly
MSMEs), Households
and Consumers
Funding Model
IFC funds, Pooled
donor funds,
client
contributions
Value Added
In-house expertise,
global/local
presence, developed
methodology and
M&E standards,
demonstrated
impact.
FINANCIAL INFRASTRUCTURE TECHNICAL
ASSISTANCE PROGRAM: MAIN FEATURES

14. • BUILDING THE
CAPACITY OF
STAKEHOLDERS
• MONITORING
IMPACT &
COMMUNICATION
S
• CREATION OF
ELECTRONIC
REGISTRY OR
CREDIT BUREAU
• LEGAL AND
REGULATORY
FRAMEWORK
1. Create Committee
2. Draft new CB or
STCR Law
3. Raise awareness
4. Submit Law to
Parliament
5. Draft regulations
6. Revise Central Bank
regulations
1. Support drafting of
technical specifications
2. Support
procurement process
and licensing (for CB)
3.Training/awareness
1. Training and
awareness raising
stakeholders (public &
private stakeholders),
including law and
registry/bureau
2. Technical training
to industry players
1. Develop M&E plan
including baseline
information
2. Conduct periodic
monitoring of impact
through registry
indicators & surveys
3. Independent
evaluations
4. Communications
1 2
4 3
BUSINESS AND DELIVERY MODEL – HOLISTIC APPROACH

15. Authorities,
regulators,
supervisors
Credit
Reportin
g Service
Provider
s
Data
Providers
Data
subjects
Users
•Users
•Public banks
•Private banks
•Central Banks
•MFIs
•Leasing companies
•Judiciary
•Tax authorities
•Insurers
•Employers
•Landlords
•Data Providers
• Public and Private
banks
• MFIs
• Leasing companies
• Credit Unions /Coops
• Credit card issuers
• Collection agencies
• Retailers/ Telecoms
• Utility providers
• Employers
• Courts
CREDIT REPORTING SYSTEMS

16. 61.0
31.5
21.3
17.3
7.0
4.9
3.8
8.0
10.1
13.1
8.2
5.3
2.7
0.8
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
OECD Latin America &
Caribbean
Eastern Europe &
Central Asia
East Asia &
Pacific
Middle East &
North Africa
Sub-Saharan
Africa
South Asia
PCBs
Private Credit bureaus dominate and
have a higher coverage.
Public Credit registries are critical to
guarantee initial development of credit
information sharing processes. 1. Sub-Saharan Africa
and South Asia have the
weakest bureau
coverage 2.
OECD and LAC highest
coverage
PUBLIC AND PRIVATE CREDIT BUREAUS

17. Legal and institutional framework to facilitate
the use of movable property as collateral for
both business and consumer credit
Bank Accounts Inventory and raw goods
Vehicles
Industrial and agricultural
equipment
Durable consumer
goods
Agricultural products (crops,
livestock, fish farm)
Intellectual Property
rights
Accounts receivable
SECURED TRANSACTIONS SYSTEMS

18. Nature of the data:
public
TYPES OF COLLATERAL REGISTRIES
Institutional set-up:
stand
alone/combined
• Managed by the Government
(Central Bank, Ministry)
• Managed by the Private Sector
(Chamber of Commerce in
Colombia/Honduras, Credit Bureau
in Sri Lanka)
• Outsourced management of data:
cloud solution
• Stand alone institution in Central
Bank or Government Ministry
(Ghana, Liberia)
• Combined platform with other
registries/agencies. Business
registries (Malawi, Zambia, West
Africa), Credit Bureaus (Egypt)
• National Centralized Registry for
all security interests in movable
and immovable property
(mortgages): Ghana

19. 19
FINANCIAL INFRASTRUCTURE PORTFOLIO IN SUB-SAHARAN AFRICA
BURUNDI
GHANA
LIBERIA
MALAWI
NIGERIA
SIERRA LEONE
SOUTH AFRICA
SOUTH SUDAN
ZAMBIA
BCEAO/WEST AFRICA
(BENIN, BURKINA FASO,
COTE D’IVOIRE, GUINEA
BISSAU, MALI, NIGER,
SENEGAL, TOGO)
BURUNDI
BEAC/CENTRAL AFRICA
(CAMEROON, CENTRAL
AFRICAN REPUBLIC, CHAD,
EQUATORIAL GUINEA,
GABON AND REPUBLIC OF
CONGO)
ETHIOPIA
GHANA
TANZANIA
ZAMBIA

20. Toolkits Network Building
Publications
Knowledge Sharing
Factsheets
Events – Peer
learning
SHARING KNOWLEDGE

21. 4. Impact on
Reforming
Jurisdictions of
Sub-Saharan
Africa and other
Regions

22. BCEAO IFC CREDIT BUREAU
PROGRAMCLIENT
BCEAO, The Central
Bank of the West African
Monetary Union (Benin,
Burkina Faso, Ivory
Coast, Guinea Bissau,
Mali, Niger, Senegal and
Togo). No existing
private credit reporting
structure.
ADVISORY SERVICES
• Develop and facilitate
a common credit
reporting law for
BCEAO region.
• Support the creation of
private credit bureaus
in the eight BCEAO
countries.
• In partnership with
BCEAO
Technical expertise
on regulation and
policy formulation,
and how to set up
private credit
bureaus.
Increased financing for
SME sector
Inclusive economic
growth
Stronger credit system
Robust regulation
SECO

23. RESULTS OF CREDIT BUREAU PROJECTS IN OTHER REGIONS
• First private credit bureau in Egypt “I-Score” became
operational in March 2008.
• I-Score has vastly expanded to include 9 million data records
that pertain to over 4 million SMEs and consumer borrowers
• It services the credit information needs of 55 subscribers
• In India, 2 bureaus (High Mark and Equifax) provide credit
reporting services for the clients of microfinance institutions
• Within 8 months, High Mark had more than 68 member
institutions, 65 million loan records, and 3.2 million inquiries
• High Mark covers 90% of the market for borrower data
• Cambodian Credit Bureau (CBC), country’s first private bureau,
began operations in March 2012
• Database contained 1.8 million records as of June 2012
• 68 members subscribed and 50 financial institutions have used
the credit reports

24. More than 100 local SMEs have received more than US$ 10 million.
Created hundreds of new jobs.
SMEs use movable assets (contracts, receivables, equipment) as
collateral
No defaults in the 30 months that program has been operating
COLLATERAL REGISTRIES - GHANA: IMPACT ON SMEs
THORUGH SUPPLY CHAIN FINANCE
CAL BANK: Purchase Financing Scheme for Gold Mining
Developed a local supply chain for big mining
corporations, through local SME service providers
OVERALL – 60,000 loans registered for a value of US$14 billion. More
than 8,000 SMEs and 30,000 Micro received loans. Collateral by type:
Inventory & receivables (25%), Household goods (20%), vehicles (19%)

25. 25
IMPACT ON CONFLICT AFFECTED COUNTRIES: AFGHANISTAN COLLATERAL REGISTRY
1US$ = 50 AF. 28.79 Billion AF = $575 million
AFGHANISTAN COLLATERAL
REGISTRY STATISTICS (As of
January 2014)
Indicators
Commercial Bank Users All
Government Account (FSD/DAB) 13
Micro Finance Institutions (MFIs) 1
Total Number of Registered Notices 1770
Total Number of Search 4065
Total Value of Registered Credit 28.79 Billion AF
Chargor Size (Less than 15 Employees) 1178
Chargor Size (Less than 30 Employees) 170
Chargor Size (Less than 50 Employees) 59
Chargor Size (Less than 100
Employees)
29
Chargor Size (More than 100
Employees)
35
Ownership Composition (Male) 1452
Ownership Composition (Female) 4
Ownership Composition (Male & Female) 15

26. • In Vietnam, legal reform and new centralized online registry
(March 2012)
• Over 200,000 loans have been registered to more than 100,000
SMEs
• Total volume of financing through the registry is US$ 2.5 billion
• In China, legal reform (2007) and new centralized online registry
for accounts receivables and leasing (2008)
• More than US$ 6 trillion in financing with receivables, mostly to
SMEs (60%)
• Development of the factoring and leasing industries
• In Colombia new Secured Transactions Law in 2013 and new
centralized collateral registry in March 2014
• In 3 months more loans registered than in the last 30 years. More
than 16,000 loans registered for a value of US$6 billion
• Collateral: Inventory & receivables (25%), Household goods
(20%), motor vehicles (19%)
RESULTS OF CREDIT COLLATERAL REGISTRY PROJECTS IN
OTHER REGIONS

27. Alejandro Alvarez de la Campa
Global Product Leader, IFC Secured Transactions
aalvarez1@ifc.org
THANK YOU