Credit Bureaus in Egypt: A Closer Look at I-Score - Decisimo
Published on: 2024-08-10 18:35:26
In Egypt, the credit bureau scene is dominated by a single entity known as I-Score, or The Egyptian Credit Bureau. I-Score plays a pivotal role in facilitating the credit system by maintaining a comprehensive database of credit information for both individuals and small to medium-sized enterprises (SMEs).
Establishment and Legal Framework
I-Score was established on August 3, 2005, following the approval of the Capital Market Authority and the Central Bank of Egypt. It was set up according to companies law number 159 for 1981 and Capital Market law number 95 for 1992.
Scope and Range of Data
I-Score maintains a credit information database that encompasses both SMEs and consumers. The database is comprehensive and offers a clear indicator to the lending community, assisting in the decision-making process for credit approvals and facilitating trust.
Members and Subscribers
As of the last available data, I-Score had an impressive 913 banks, companies, and microfinance institutions subscribing to its services. This wide range of subscribers demonstrates the significant role I-Score plays in the Egyptian credit market.
The Unbanked Population
However, it is crucial to mention that a large portion of Egypt's population remains unbanked. Reports suggest that over 50 million individuals are unbanked out of an estimated total population of around 110 million in 2021. This represents at least 67% of the Egyptian adult population.
A significant reason cited for being unbanked is insufficient income, as almost 45% of the unbanked individuals indicate lack of enough money as the prime reason for not having a bank account​​.
Impact on the Credit Market
By providing almost full coverage of credit data for individuals and SMEs, I-Score has been instrumental in supporting financial inclusion and driving economic growth in Egypt. It has also played a critical role in ensuring that the lending community has access to reliable credit information, which is essential for assessing creditworthiness, managing credit risks, and facilitating responsible lending practices.
Implications and Challenges
The high percentage of the unbanked population poses challenges for credit bureaus like I-Score, as a major segment of the population lacks formal financial records. This makes it difficult for them to be part of the formal credit system and, hence, they are not represented in I-Score's database.
Alternative Data for Financial Inclusion
One promising avenue to address this challenge is the utilization of alternative data. By using non-traditional data sources such as mobile phone usage, utility bill payments, and other forms of informal financial activity, credit bureaus and financial institutions could potentially assess the creditworthiness of individuals who do not have formal banking history. This would pave the way for greater financial inclusion and enable the unbanked population to have better access to credit and other financial services.
Published: 2023-06-26
