A UN study has recommended the adoption of mobile phone use data in gauging the credit score of low-income earners to increase their chances of accessing microloans.
A global partnership bringing together governments and private sector players (ID2020 Alliance) said the traditional identity card and documentary evidence of an individual’s financial history locked out millions of low-income earners from getting funds for income-generating projects.
“Financial technology (fintech) firms can partner with data analytics firms to generate data that make credit rating possible for millions of East Africans.
“This will also help reduce the cost of loans where microfinance institutions will have access to more accurate information on an individual’s financial ability when determining the amount of money to loan out,” it noted.
The report said that with smartphones becoming more affordable in Kenya, data miners (fintechs) such as Kenya’s Tala had access to an unprecedented amount of credit data that could be harnessed to determine whether a loanee was a flight risk or not.
