STRATEGY & ROADMAP FOR STRENGTHENING THE CREDIT REPORTING SYSTEM IN ESWATINI1 Strategic Objective # 1 - Strengthen the Legal and Regulatory Framework Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 1.1 Review the CCA, 2016 to 1. Legal framework that is Lead: MOF ensure coverage of critical consistent with international 1. CCA Amendment substantive issues for credit best practice and is not in Act Short Term reporting (Gaps # 6,7, 8, 11 & conflict with other legislation 12) 1.1.1 Carry out Stakeholders’ Consultation 1.1.2 Draft amendments to the CCA, 2016 1.1.3 Submit CCA Amendment Bill to parliament for approval. 1.2 Develop 1. Framework that facilitates 1. Draft guidelines for Lead: MoF Short Term regulations/guidelines for the the evolution of a fair, licensing and Support: FSRA & licensing Credit Reference competitive and efficient regulating credit CBE Bureau and regulating credit credit reporting system. reporting activities. reporting activities 2. Credit Bureau collects, and 2. Adoption by credit (Gap #10). data providers and users bureaus and 1 Overall, we recommend an activity to form and create a stakeholders working group comprised of all key local stakeholders (credit bureau, lenders, regulators etc.,) that will be engaged in the overall credit infrastructure development work and responsible for making decisions and acting on them; particularly to address data issues: submission and quality over the medium to long term. It has been demonstrated that the engagement of key local stakeholdersresults into more sustainable results and their involvement speeds up the process. The, WBG could support the working group from its position as “honest� broker technical assistant partner . Page 1 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) share information for clearly financial institutions 1.2.1 Draft credit bureau listed permissible purposes. of credit reporting regulations. 3. Increased confidence in the best practice 1.2.2 Hold stakeholders credit reporting system with consultative participants aware of data workshop to review security, protection of data draft regulations. subject’s confidentiality and 1.2.3 Update draft dispute handling obligations regulations with and regulatory compliance stakeholders’ inputs. requirements. 1.2.4 Approve and issue the Credit Bureau Regulations 1.3 Mandate credit 1. Credit bureau (s) is able to 1. Number of financial Lead: MoF Medium Term information sharing by all gather information from all institutions & non- Support: FSRA & credit providers and other relevant data providers and financial creditors CBE, RSTG data sources (Gaps # 2 & 4). other data sources relevant participating in the CRS for credit reporting including banks, non-bank credit 1.3.1 Draft and issue providers, fintechs/digital 2. Number of non- circular to mandate lenders, suppliers of goods traditional data sources credit information and services on a post-paid contributing to the CRS. sharing by all or instalment payment basis; regulated financial telecommunications and 3. Number of public services and credit utility providers, retailers. databases accessible by providers. CRSP. 2. Credit Bureau is able to 1.3.2 Communicate/publish access Identification mandatory CRB databases and other private usage by FIs circular. and public records Page 2 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 1.3.3 Agree protocool for accessing National ID Database to verify ID Strategic Objective # 2 – Improve Data quality2 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 2.1 Develop and adopt a 1. Data providers use clear, well Number of credit Lead: FSRA Short Term data submission template understood and industry providers submitting Support: CBE/ together with validation adopted template to submit data to the Credit Industry rules (Gaps # 1, 3, 4 & 5). data to credit bureau; Bureau using the agreed Association 2. Mandatory and optional data data template. 2.1.1 Develop a data input requirements are submission established and practiced by template. data providers; 2.1.2 Workshop the 3. Improved data quality with data submission data updates performed on template with the basis of pre-defined industry. schedules and/or specific 2.1.3 Issue Circular to trigger events and banks and FIs accountability for data mandating the accuracy and completeness usage of the commonly 2 A stakeholders working group, including the regulator as part of the group, will be particularly important for the data quality improvement activity. Page 3 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) adapted clearly established and template in monitored along the chain. submitting data to the CRB. 2.1.4 Stipulation of the process and timeline for updating credit data. 2.2 Implement and enforce Accuracy and completeness of Number of data FSRA and CBE Medium Term the usage of the common data is assessed against providers accurately data submission template commonly adopted data completing most (75%) validation rules; of the mandatory data 2.2.1 Submission of credit submission fields reporting data compliance report to FSRA. 2.2.2 Compliance monitoring of CRP data submissions and completeness and enforcement. 2.3 Support for Lead: Credit Medium Term strengthenigng the Eswatini SCDSA that provides a sustainable A properly constituted Bureau, Bankers Credit Data Sharing platform for stakeholder and managed SCDSA Association, SACCO Association (SCDSA) to engagement and advocavy. Ltd ensure a broader mandate and active role in developing the credit reporting system in Eswatini. (Gap # 6) Page 4 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 2.3.1 Review the objectives, mandate and governance framework of SCDSA. 2.3.2 Develop and adopt a funding model for sustained operations of the SCDSA. 2.4 Establish MOUs with Credit Bureau is able to collect Number of public Lead: MOF Medium Term regulators of relevant non- information from relevant non- databases accessible by Support: financial institutions credit financial institution data CRSP. FSRA/Credit providers or potential users providers such as telcos, water Bureau of the information from the board and other public data credit bureaus (such as sources relevant for credit telcos, utilities providers, reporting. public databases) to support inclusive credit reporting (Gaps # 2 & 5) 2.4.1 Facilitate and hold discussions with relevant regulatory authority – e.g. Home Office, Communications Commission, Water Service Corporation. 2.4.2 Draft and execute MoU for data sharing with public registry Page 5 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 2.4.3 Collect data from non-financial institutions data providers 2.5 Support existing efforts 1. MFIs and SACCOs contribute 1. Number of MFIs and Lead: MOF Medium Term to establish a data hub that data to the CRS. SACCOs contributing will collect data from MFIs 2. An integrated and inclusive data to the CRS. and SACCOs to populate Credit reporting system that credit bureaus’ databases services all lending segments, 2. Number of MFIs and (Gaps #2 ,3 ,4 & 5). regulated and non-regulated. SACCOs integrating credit reporting 2.5.1 Assess status of services in their implementation and credit and risk capacity of the management MFI/SACCO data hub processes project 2.5.2 Incentivise MFIs/SACCOs to use datahub for submitting data to the credit bureau e.g offsetting datahub and CRB integration costs. 2.5.3 Integrate SACCO datahub into the credit bureau Page 6 of 14 Strategic Objective # 3 – Enhance Supervisory Oversight of the Credit Reporting System Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 3.1 Clarify the scope, roles 1. Improved cooperation Consumer Credit MoF Short Term and responsibilities of the between market conduct Amendment Act. CBE and FSRA vis-à-vis and prudential supervisors supervisory authority over for the evolution of an the credit market (Gap # 9). efficient credit market. 2. Clear delineation of roles 3.1.1 Coordinate and responsibilities for consultations and credit market conduct and discussions between prudential supervision. relevant government agencies to clearly define the roles and responsibilities of FSRA and the CBE in the context of strengthening market infrastructure whilst maintaining financial stability and improving market conduct across the credit ecosystem. Page 7 of 14 3.1.2 Review and amend the Consumer Credit Act, 2016. And agree on collaboration amongst various regulatory entities that are relevant to credit information (FSRA, CBE, telcos regulator etc.,) 3.2 Develop a framework for Collaborative and effective 1. Signed MOU Lead: MoF Short Term coordination and supervisory oversight of the Support:FSRA/CBE collaboration between the credit reporting system and 2. Credit reporting CBE and FSRA on supervising overall credit market in Eswatini. Supervision teams at credit reporting activities FSRA and CBE (Gap # 9). 2.2.1 Draft MOU 2.2.2 Establish protocol for collaboration 2.2.3 Set up credit reporting suspervison teams at FSRA and CBE 3.3 Build and strengthen the Effective oversight over the 1. Number of Lead: FSRA Medium Term capacity of supervisors for credit reporting system through workshops for Support: CBE effective oversight of credit increased knowledge and supervisors of the reporting activities compliance monitoring skills by credit reporting (including credit reporting the regulator. system. service providers and credit and data providers). For Page 8 of 14 credit information service 2. Number of providers, the licensing and supervisors of credit supervision of credit bureau institutions trained. operations will be 3. Framework for emphasized. (Gap # 8 & 10). oversight (off and on site) and 3.3.1. Workshop for supervision of credit supervisors of the reporting activities. credit reporting system. 1.3.4 Develop a framework for oversight and supervision of credit reporting activities. 1.3.5 Implement a framework for oversight and supervision of credit reporting activities. 3.4 Support on-site audit 1. Improved effectiveness and 1. CRB examination Lead: FRSA Medium Term and off-site examination of accountability of CRB. report Support: CBE credit reference bureau to 2. Increased usage of credit 2. Number of credit ensure effective governance, bureau services. bureau enquiries risk management and internal controls of CRSP (Gap # 8). 3.4.1 Develop framework and guidelines for on-site audit and offsite supervisory review of credit Page 9 of 14 bureau and credit reporting activities. 3.4.2 Prepare framework and guidelines for on-site and off-site supervisory review of data providers. 3.4.3 Carry out joint on- site examination of credit reference bureau Strategic Objective # 4 - Increase Usage of Credit Bureau Services Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 4.1 Build and strengthen the MFIs and SACCOs contributing Number of MFIs and Lead: MoF Medium Term technical capacity of MFIs credit information to CRB. SACCOs contributing Support: FSRA and SACCOs to incorporate data to the CRS. credit reporting into their operations (Gaps # 2, 3, 4 & 5). 4.1.1 Support cost effective record digitization initiatives for MFIs/SACCOs 4.1.2 Hold workshop and training for SACCOs on the benefits to Page 10 of 14 members of participating in the CRS 4.2 Mandate financial Banks and FIs using credit Number of Banks, Lead: FSRA Medium Term institutions to inquire with reference bureau products for MFIs and SACCOs Support: CBE the credit bureau before credit extension and risk using CRB services. extending any credit or management. facility (Gaps # 2 & 5). 4.2.1 Draft and issue Circular to mandate credit reference bureau check for credit by banks and FIs. 4.2.2 Monitor compliance by FIs with the manatory credit bureau check requirement 4.3 Improve lenders’ 1. Lenders/credit providers 1. Number of Lead: FSRA Medium – understanding of the use of participating in credit lenders using Support: Credit Long Term credit bureau products and reporting system. CRBs services. Bureau/CBE services in increasing 2. Increased credit bureau 2. Number of Valued Added lending, especially to the enquiries. Services used by underserved, such as lenders. women and micro and small businesses (Gap #4). 4.3.1 Hold workshop for FIs on the benefits of an integrated credit reporting system and Page 11 of 14 collateral registry for movable assets. 4.3.2 Lenders update credit policy to incorporate credit reporting services. Strategic Objective # 5 – Improve Public Understanding of and Support for the Credit Reporting System Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 5.1 Promote borrowers’ 1. Increased consumer Number of self- Lead: FSRA Medium Term rights to view, dispute, and confidence and trust in the enquiries. Support: CRB/Lenders correct their own CRS. information (Gap # 8).3 2. Improved data quality. 5.1.1 Develop guidelines for resolving credit reporting related disputes. 5.1.2 Publish information regarding consumers’ rights including access to free credit report and the complaints handling process on easily accessible media including websites, banking app, etc. 3 it is important the the bureaus and or credit providers have a user friendly system to resolve complaints, and that the regulator monitors these. Page 12 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 5.1.3 Draft and issue circular requiring all credit providers to implement consent clause 5.2 Carry out a 1. A CRS supported and owned 1. Number of Lead: MoF Medium to comprehensive awareness by all stakeholders – mentions of Support: FSRA/CBE/FIs/ Long Term and education campaign for lenders, consumers, govt. credit reporting CRSP/ SCDSA lenders and borrowers on all officials, policy makers, related features aspects of information regulators, etc. by the media sharing, such as benefits, 2. Increased awareness among 2. Number purpose, obligations, rights, data providers, users and of inquiries usage, etc. (Gap #4). consumers of the credit made to credit reporting system – process bureaus post 5.3.1 Develop a public of data collection and the campaign. awareness campaign benefits of information 3. Increase in strategy for credit reporting. sharing as well as number of consequences of a negative claims made to 5.3.2 Procure services of a credit listing. credit bureaus. communications and media 4. Number of on- firm to coordinate time loan implementation of financial repayments. literacy campaign. 5.3.3 Constitute a Working Group of key stakeholders. 5.3.4 Develop action plan for the financial literarcy campaign and implement same. Page 13 of 14 Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 5.3.7 Develop a sustainability action plan for CR financial literacy. 5.4 Enable an on-line, secure 1. User friendly, convenient, Number of self- Lead: CRB Medium Term system for consumers to and cost-effective means of enquiries made to access their own credit consumers to access their the credit bureaus. reports or by other own credit reports. consumer friendly means (Gap #8). Strategic Objective # 6 – Promoting Cross Border sharing of data Activity Expected Outcomes Key Performance Responsible Time Frame Indicator (KPI) 6.1 Coordinate with other Standardization of data formats Number of Lead: FSRA Medium Term authorities within the SADC and procedures to facilitate countries within region to promote safe and cross-border credit data SADC sharing credit secure credit reporting transfers. data with Eswatini. systems (Gap #12). Key Timeframe Description Short term Within 12 months Medium term Between 18 and 24 months Long term 24 months and beyond Page 14 of 14