Egypt: Strenghtening Credit Registry System
FIRST implemented two interrelated projects to strengthen credit reporting systems in Egypt. The first project was to assist in developing a strategy for widening both the content of the Central Bank’s credit registry and the eventual access to it by non-bank users of credit. The second project was to assist with implementation of the strategy (the Board of the Central Bank having fully endorsed the strategy proposed in the initial project) and to facilitate sharing data with a proposed first private credit bureau supported by USAID.
The Central Bank of Egypt, which supervised the Egyptian banking system, had operated a public credit registry (PCR) since 1957. In broad terms the PCR covered about 63 borrowers per 1,000 people and was used by the Egyptian public and private banks, although to what extent it was relied on was not clear.
The PCR dealt with credit facilities over and above US$6,000 (EGP 40,000) provided by the banking sector. One of several already-identified problems was that combined exposures above the threshold amount were not reported – borrowers might have multiple loans at different institutions and yet remained unreported on the PCR. In addition, the threshold of US$6,000 meant that it was of limited use for applications such as consumer or small business loans. Non-bank institutions had no access to the PCR. The system was automated and running live through the CBE network.
The purpose of the project was to develop a strategy for the Central Bank of Egypt (CBE) to expand its public credit registry (PCR) in three ways:
The strategy recommendations of the project were adopted by the Board of Directors of the CBE and this led to FIRST funding a follow-up project to strengthen Egypt’s credit reporting system, which began in July 2005.
USAID approved a project to provide technical assistance for the establishment of a private credit bureau targeting non-bank financial institutions: sub-components of this were regulatory work and awareness campaigns. The likely time frame to have such a bureau up and running was about two years.
FIRST’s follow on project dovetailed neatly with the USAID project. The CBE’s Public Registry was able to start co-operation and information sharing with the embryonic new credit bureau. Initially, eventually both bureaux continued to co-operate but with focus on their separate segments of the financial sector. An eventual merger of the two, as part of the privatization process of the CBE’s public registry, has not been ruled out.