GnuGrid CRB, Uganda’s first and only indigenous credit reference bureau licensed by the Bank of Uganda, and Airtel Mobile Commerce Uganda Limited, a provider of affordable and secure financial services in Uganda, have today unveiled Uganda’s first-ever mobile credit scoring system. Aptly named Mobile Credit Score, the solution has been developed with the support and regulatory guidance from the Bank of Uganda and the Uganda Microfinance Regulatory Authority.
Unlike traditional and more conservative credit reports available on the market today, which rely solely on credit history supplied by regulated financial institutions, the more innovative and proactive gnuGrid CRB and AMCUL Mobile Credit Score go beyond that and rely on over 400 alternative data points such as client mobile financial behaviour to create a more comprehensive and inclusive credit score.
“The future of lending is undeniably digital; at gnuGrid CRB, we are at the forefront of this transformation. The use of alternative data, complemented by a hybrid of conventional banking data, forms the backbone of our approach. This ensures a holistic and inclusive evaluation of individuals’ creditworthiness, opening doors for a broader spectrum of borrowers who may have been overlooked in traditional lending models,” said David Opio Obwangamoi, the Executive Director of gnuGrid CRB, at the breakfast launch held at the Kampala Serena Hotel.
“One of the profound impacts of this credit scoring system is its ability to enhance reputational collateral; we understand that a good credit score is not just a number, it is a reflection of financial responsibility and trustworthiness. By providing lenders with a comprehensive and accurate assessment of creditworthiness, we are not just facilitating loans; we are building a foundation of trust within the financial ecosystem. This, in turn, will empower individuals to establish and strengthen their financial identities,” Mr. Opio added.
The solution will enable millions of Airtel subscribers to access affordable credit. The service will subsequently be extended to Airtel’s lending partners and all lenders within Uganda’s financial ecosystem, including Tier I-IV financial institutions, as well as Non-Bank Payment Service Providers and Payment System Operators licensed under the National Payment Systems Act, 2020.
Under the Uganda National Financial Inclusion Strategy (NFIS) II (2023 – 2028), which aims to reduce poverty and promote economic growth through affordable and quality financial services, the government seeks to increase access to formal financial institutions (banks, non-banks, including mobile money) from 66% in 2021 to 75% by 2028. Additionally, the government aims to increase private credit bureau coverage from 6.9% of adults in 2019 to 15% by 2028.
According to the World Bank’s Global Findex Database 2021 (Findex 2021), 66% of Ugandan adults are estimated to have access to a regulated financial account, driven by the penetration of mobile money. The report notes that close to 77% of Ugandans borrow money, but only 31% borrow from a formal financial institution. Findex 2021 also notes that while digital financial services (DFS) have enabled more Ugandans to access formal financial services, payments are the most prominent formal financial transaction at 64%, with formal saving and borrowing remaining low at 32% and 29%, respectively.
One of the stumbling blocks to catalyzing the immense potential of digital lending has been how to innovatively work around the classic way of assessing creditworthiness and other challenges such as lack of access to collateral, especially for women and the youth. Alternative data-driven credit scoring and other innovative digital lending models, such as those being heralded by this new mobile credit scoring system, have emerged as strong alternatives for effective and efficient loan origination, risk assessment, disbursements, repayments, as well as performance tracking.
Efficient and cost-effective borrowing and lending
Commenting about the Mobile Credit Score, Japhet Aritho, the AMCUL Managing Director, said, “For AMCUL (Airtel Money Uganda), this partnership signifies a leap towards financial inclusion, empowering more people with access to credit. It’s about recognizing the potential in each of our customers and supporting their aspirations. It’s about being a catalyst for growth and development in our communities.”
“As we embark on this exciting journey, we are not just offering a service; we are unlocking potential. We are creating opportunities. And most importantly, we are building a future where financial barriers are reduced, and dreams are within reach,” Mr. Aritho added.
Benefits to lenders include enabling the filtering out of high-risk borrowers; supporting business sustainability by minimizing credit defaults as well as supporting the creation of tailor-made new products that will grow customer bases and clientele. Lenders will also be able to reduce the operational costs of lending, such as risk assessment and insurance. The resulting efficiency and cost reduction are expected to translate into a reduced cost of money in the medium term, especially for genuine and credit-worthy borrowers.
Borrowers will also be able to know their creditworthiness/financial health instantly; which will, in turn, help them to improve their creditworthiness, access credit faster, as well as sustainably grow their loan limits.
“Financial inclusion is not just a goal; it’s a journey that empowers individuals, communities, and entire economies. With the introduction of our mobile credit score, we aim to extend the benefits of financial services to last-mile users, especially focusing on the youth and women of Uganda. We believe in the potential of every individual to contribute to the economic growth of our nation. Through this innovative credit scoring system, we are breaking barriers and providing opportunities for those who have been traditionally underserved,” Opio reiterated.
“This innovation is a testament to our commitment to fostering financial inclusion, a cause that resonates deeply with our mission at gnuGrid CRB,” he concluded.
Stakeholders speak out
Speaking at the launch event, several government and private sector stakeholders hailed the Mobile Credit Score as a transformative and ground-breaking development in the financial landscape of Uganda, as well as a significant milestone in the journey towards financial inclusion up to the last mile person.
The Commissioner, Financial Services at the Ministry Of Finance, Planning And Economic Development, and the guest of honour at the launch, Mr. Moses Ogwapus, said that the Mobile Credit Score was a “ground-breaking development that aligns seamlessly with the broader national core principles of financial inclusion, responsible lending, and the use of technology for economic empowerment.”
“The focus on financial inclusion, especially reaching the last mile customers, youth, and women, is a key pillar of our national economic development strategy. Microfinance institutions, particularly Tier IV, are crucial in delivering financial services to these underserved populations. The mobile credit scoring system unveiled today has the potential to revolutionize the way these institutions operate, making them more effective in reaching the grassroots and contributing to poverty alleviation.”
Pascal Mukisa, the Head of CRB Services, in the Department of Non-Banking Financial Institutions at the Bank of Uganda, said the use of alternative data in credit scoring “creates a 360-degree understanding of who a prospective borrower is and what his or her ability to repay is.”
“As a regulator overseeing the sector, we recognize the importance of these advancements and the contribution they make to the stability, efficiency, and inclusivity of our financial system. Let us celebrate this milestone and recognize the potential of alternative data and alternative credit scoring in transforming our financial lives and driving economic progress,” he said.
He hailed gnuGrid for standing out as the only indigenous CRB.