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Now customers can access credit information via mobile phones

Sam Omukoko is the group managing director for Metropol Corporation Limited, a business, information and credit management company. He spoke to The Independent’s Julius Businge about their business in Uganda and the East African region.

Could you describe the role of Metropol Corporation Limited?

Our role is to compile and share credit history of borrowers in the credit market. We are a company operating in Kenya and Uganda. We got our application and license in November 2015 for Uganda.   We delayed entering the Ugandan market because the regulator (Bank of Uganda) had made certain commitments where an entity had been given exclusive rights of operation for five years and had applied for an extension for an additional two years. In Kenya, we got our operational license in 2011 but our involvement in the credit information sharing mechanism started in 1994.

Then, what have you been doing over the last four years?

The core business of the bureau is based on the data it gets from the banks. Therefore, the first task for us was to seek for data. The good thing is that there is a rule that ensures that data is shared with the already existing player. We therefore got data from BoU and the existing player and later did data cleaning. (However), we had noticed a problem of standards not being observed and banks not doing all submissions. So, we had to develop tools to help banks cleanup the data that they were sending to us. In mid-2017, we started connecting banks to start referencing. And given that these banks already had a relationship with the existing player, we never wanted to go in as a low cost provider as that would in the long run destroy the industry. We had to first focus on specific value proposition regarding our system, quality of data, and the quality of the credit report. So, quite a number of banks have moved to us. We have spent quite a bit of money on the system and we believe we are almost ready to launch the bureau officially in November this year. So far, we have two million customers in Uganda and 27million in Kenya.

On May 08, 2019 you launched a new product known as Metropol Crystobol in Uganda. How does it benefit the market?

This product helps users to monitor and control their credit information using their mobile phones. The product enables users to have direct access to the bureau using MTN and Airtel networks. It is enabling borrowers to take control of their creditworthiness and to negotiate favorable credit terms with lenders.

What have you observed on the Ugandan market so far?

We have realised that many borrowers in the market are not aware of the existing and roles of credit reference bureau in Uganda because the system is only locked to the banks that are supervised by the Bank of Uganda. Yet there are many lenders that are not under the BoU. Also for one to borrow, they have to be given a financial identity manufactured by the other player in the market.That means that the other player has an advantage and it is the reason we told BoU to create a level playing field for all of us. We are talking to relevant authorities to see how people can use the National Identification Number to be able to join the bureau instead of using the financial card number. We believe that the lack of the National ID is hampering the use of the CRB and growth of the financial services products. Our mobile phone product is connecting the lender and the borrower on the system and all are seeing each other. Borrowers can now know and see how the lender has arrived on the decision to give the loan at a specific price. You can see that it is all about developing a transparent credit market.

With these new innovations, aren’t you giving your competitor new ideas to fight you back?

That is what a free market is all about. We expect that competition will stiffen. We have set up a call centre here and already calling customers in the market who are saying they only get a few services. We will try to harvest from the first mover advantage and see what forms of partnerships we would create with lenders. With support from BoU, we are now going to non-regulated entities like micro finance institutions, money lenders; SACCOs who we think shall start sharing data amongst themselves and help their customers built credit history using National Identity Cards.

But banks have been hit with bad loans even with the CRB services in the market?

Every time a mechanism like this [CRB] is out to the market, some people will go out to beat the system. If some borrowers understand that SACCOs and other entities are not part of the credit reference system, they will run there and borrow with their bad history. Our objective is to try and bring everybody into the net. There is significant number of initial borrowers who are inactive in our system. Where did they go? They are in SACCOs and Micro-Finance Institutions borrowing with a bad history. The bureau mechanism is supposed to allow more people to come into the borrowing and lure banks develop more products that are non-collateral. When that happens, the product fit become more refined. Many people default because they get wrong products. We expect banks to be more innovative and develop more new products. In Uganda, interest rates are high and that is a significant fact towards defaults we see in the market.

In September 2017, Equifax – a U.S. based Credit Reference Bureau was hacked into and 143 million consumers data was exposed to the danger of identity theft. How safe is your system?

That is the only incident I have heard about. It is not that the hackers were smart…it is because Equifax forgot to run an update which would have made the system more secure. A small mistake can cost the breach of trust of the system. CRB systems are not new globally. The World Bank has a special unit that supports the development of credit bureaus across countries. They have given standards which central banks enforce. For you to get a license from the central bank, you must have met those standards – which are developed by a technical team at the International Finance Cooperation. Our activities have to be audited annually by internationally respected firms in addition to us sending monthly reports to BoU.

You are strong in Kenya and you want to be stronger in Uganda. What is your strategy for other markets in the region?

Our strategic plan running from 2019-2023 is targeting about 10 countries on the African continent including Tanzania, Zambia, Malawi, Zimbabwe and other markets. We still want to consider more from the South before we consider more from the North. We have relationships with strong players like Afreximbank who want to see us covering more countries on the continent before partnering with us.

You hinted on the cost of doing business being high in Uganda. What are your recommendations?

There is a lot of rigidity in the financial system. Everything here follows the law unlike in other places where the law follows innovations. Here, before you do anything, the law has to be in place first. Look, when we came in 2015 there was an amendment that had gone to Parliament to expand the mechanism to allow MFIs to come on the CRB. By February 2016, Parliament passed that amendment to the banking act which gave way for drafting regulations which have never been approved to date. The system is slow, rigid. I have told BoU to sometimes wear some hat of an entrepreneur to be able to allow innovation to happen in the market. We have revised our strategic plan because most of the assumptions we made collapsed because of the delays we faced. The National ID can do much for the economy but it is politicised. It can become a unique identifier for access of financial services – and this market can change overnight. The other issue is about internet – many banks have a narrow bandwidth and when it comes to using internet based applications it becomes a problem because systems are slow. Banks don’t want to incur more costs.

What other economic related opportunities are you offering?

We are contributing towards Pay as You Earn, National Social Security Fund and have the capacity to create jobs. Our new mobile phone product has made us open a call centre currently manned by four people. This number will increase to between 50-60 people when SACCOs and other Micro Finance Institutions join the CRB. We have capacity to create around 500 jobs within three years time.

What picture do you have in mind for your business in five years time?

We should be having between 7-10 million borrowers in the database. In terms of number of businesses, we envisage to have between 500, 000-750, 000. We will be having a product for each lender depending on the environment they are working in. We will continue to raise awareness on CRB system since we are not a monopoly in this market.

How do you manage your tight schedule as a manager?

This is a highly knowledge business and you cannot supervise people. People have to think to come up with solutions. My style has always been management by objective –sit down and agree on targets and put tools of work at work. I support internal training programmes and we have a system that empowers managers not to fear to take initiatives.

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