How a credit bureau works in Somalia

A credit bureau, also called a credit reference bureau or a credit information bureau, keeps the credit history of people who borrow: the loans they have had from its member lenders, and how each one has been repaid. When someone applies for a loan, the lender asks the bureau for a credit report on them before it decides.

A credit bureau gives information, not decisions. It does not lend, and it never approves or refuses a loan: the lender reads the report and decides on its own checks. Elsewhere on this website, NCI is called the registry.

Without a credit bureau, each lender sees only its own customers. It cannot tell that an applicant already owes two other lenders, or that someone new to it has repaid loans elsewhere for years. So it asks for collateral, and people with a good record but no title deed to pledge find it hard to borrow.

With one shared record:

• a lender sees an applicant's loans at other lenders before it approves a new one, and can set the amount and the repayment period to match;
• a borrower who pays on time builds a record that follows them to every member, and that record can stand in place of collateral;
• a false identity, one person under two IDs, several applications at once or the same asset pledged twice is easier to catch.

1. A member asks. Before it lends, a member sends NCI the details of the person who has applied to it, with that person's signed consent.
2. Every other member is asked. NCI asks all the other members whether they know the person. Each answers from its own books: not known, or known as a borrower or a guarantor, with every loan and how it has been repaid.
3. One report goes back. NCI puts the answers together in one credit report, with a credit rating and its reasons when the person has a loan record. The other members appear in it only as Member A, Member B and so on.
4. The member decides. The report informs the decision; the member makes it.

• It does not lend. NCI is not a bank and is not part of any bank or lender. To borrow, apply to a bank, a microfinance institution or another licensed lender.
• It does not decide. NCI never approves or refuses a loan. The report and the rating inform the lender's decision; the lender decides.
• It answers to no single member. Every member is asked the same question, and every applicant is rated on the same published scale.
• It does not sell information. NCI does not sell personal information or use it for marketing, and a member may ask about a person only when that person has applied to it for credit.