Small Medium enterprises in Kenya can now capture their credit rating reports via mobile phones, a relief from time consuming travels to relevant offices and bureaucratic paper work that were not only tedious but also costly, thanks to *433#, an SMS platform by Metropol, a credit rating bureau.
Initially, SME operators were forced to visit a Credit Reference Bureau (CRB) office with a certificate of incorporation and wait in queue for hours to obtain their credit reports once in a year. This scenario has left many SME seeking urgent credits from financial institutions in dilemma especially if they have ever defaulted.
According to Michael Rotich, an Account Manager at Metropal CRB, the SMS platform just require a client to insert the name of business and a personal identification number to obtain credit status at any given time. This report is important to SMEs since it gives them a clear picture of how financial institutions view them.
Rotich explained that anytime a person or an SME applies for a loan from any creditor, the respective financial institution views the financial stability of the borrower and past credit history before presenting its offer. Those found with default history are asked for credit clearance certificate from a credit rating board upon clearing the pending debt. ‘Metropal CRB charge only Sh2200 for a clearance certificate,’’ said Rotich.
This finding comes in the wake of a report by University of Nairobi’s School of Business that reveals an increase in loan default by SMEs due to poor credit analysis and monitoring, type of loan, repayment period and harsh economic conditions.
The report added that with the introduction of mobile phone credit services like M-shwari, most individuals and SMEs are not aware of their credit status hence a need to track their credit rating reports. The report concurs with Rotich’s observation that most SMEs are denied credits by financial institutions due to unknown defaults. A part from measuring the financial strength of SMEs, Metropal CRB act as a mediator between a borrower and a creditor, hence solving financial disputes instead of costly and time consuming court processes.
To access *433# services, the customer should have a mobile phone credit of not less than Sh5 for all mobile phone networks in Kenya. He is charged a one off fee of Sh100 which guarantees him an updated and reliable credit report in the comfort of his shed.