> Posted by Center Staff

Credit reporting systems are a critical component of a financial system’s infrastructure. They facilitate access to credit for all who can use it, protect clients from overindebtedness, and help providers manage risk and decrease costs. What’s the state of credit reporting in the Middle East and North Africa (MENA) region? That’s the focus of the Arab Credit Reporting Guide, a new resource from the Arab Monetary Fund (AMF) and the International Finance Corporation (IFC). The guide was launched earlier this week alongside a meeting between the region’s central banks’ governors. In short, the guide finds that MENA countries have come a long way in developing credit reporting systems in recent years, but there’s still a long way to go.

The guide examines the region – 19 countries in total – in the context of global trends and best practices in credit reporting. A regional overview sheds light on credit reporting as well as credit access and risk management in MENA, while the guide also provides detailed investigations into the practices and progress of individual countries. A composite index comprised of the key elements for a comprehensive credit information sharing system is applied to each of the studied countries, offering a quantified status on credit reporting in each.

What were the big findings?

  • Credit bureaus are a recent phenomenon in the region – 13 MENA countries still rely entirely on credit registries, which is a higher percentage than all other regions except for sub-Saharan Africa
  • The six countries with an operational credit bureau (Bahrain, Egypt, Kuwait, Morocco, Saudi Arabia, and the UAE) received the highest index scores
  • In terms of index scores, tracked between 2008 and 2012, seven countries didn’t improve, and six countries improved their scores by three points or less (top possible score is 21)
  • Aside from Egypt, Morocco, and Saudi Arabia, which the guide identifies as great countries for credit reporting, most MENA countries have to undertake more initiatives to improve their scores and make their credit reporting systems more comprehensive
  • Five out of the six credit bureaus in the region are fully or partially owned by the banking sector
  • Consumers in 14 countries have access to their own reports, and all countries, except Libya, have mechanisms in place for consumers to raise disputes on erroneous data
  • Basic laws and regulations allowing for credit reporting exist in several countries, yet roughly half of countries do not have specific laws or regulations in this regard

The guide is part of the Arab Credit Reporting Initiative, a joint effort from the AMF and IFC, which along with assessing the state of credit reporting in the region, works to foster regional coordination, raise awareness, and develop strategies, policies, and action plans in this area.

For more details, read the full guide here.

Have you read?

Buena Paga, Mala Paga: An Incomplete and Personal History of Credit Reporting

New Research Highlights Increasing Use of Alternative Data in Credit Reporting

The Future of Creditworthiness