Unpaid water and power bills may be hurdles to bank loans: New Credit Information System in Mozambique – Watch

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Unpaid water and power bills may be hurdles to bank loans: New Credit Information System in Mozambique – Watch

7:46 CAT | 31 Oct 2016

TVM

Citizens who do not honour various financial commitments like bank loans instalments or public utilities bills may be prevented from qualifying for bank loans.

According to a spokesperson for the Bank of Mozambique, a loan is after all a risk, since the value may or may not be repaid by the customer.

The new credit information system will reduce information asymmetries in the market and allow more people to access financial services, according to what the Bank of Mozambique explained in Beira.

This statement was made in the context of the new credit information laws and regulations. Law No. 6/2015 of 6 October ( Privately Managed Credit Information System Law) and Decree No. 11/2016, of 16 May which, among other provisions, establish the obligation to obtain a permit from the information central before any financing decision.

The Bank of Mozambique’s Eugénio Luis said that the credit reporting system, will be composed of the information centres, to be handed to private management. These centres will gather all the information from data providers, subscribers and customers, in a system that is expected to deliver multiple benefits for all financial services, since the platform will make it possible to find out the level of indebtedness of any person.

He explained that, using information from the tax authorities, payment of water and electricity bills and debts to other institutions, the system can assess each person’s level of indebtedness and thus help to better plan additional debt.

“With the credit information centres fully operating, the time that financial institutions take to grant credit will fall.”
For the director of the Bank of Mozambique in Beira, Anastacia Chamusse, the legislation currently being publicised will bring positive results to the economy.

“The approval of the Law of the Information System on Private Credit Management and its Regulation will make obtaining relevant financial information easier and provide a better customer credit risk profile, which will facilitate access to credit. This legislation represents a remarkable milestone for the Mozambican economy and financial institutions as it is an essential tool for the efficient functioning of the financial system,” she said.

William Diaz Alvarado, from German Cooperation (GIZ), said that the legislation would help promote lending to the corporate sector.

Millennium Bim administrator Moisés Jorge said in an interview with Noticias that the legal instruments would play an important role for citizens as well as for the financial sector.

The Bank of Mozambique will licence and supervise the activity of these information centres.

The minimum social capital required to establish a credit information centre is 16 million meticais ( around US$209 thousand at current rates).