‘Sharing info crucial to SMME financing’

2008-12-23 00:00

Effective information sharing is crucial in efforts to ensure access to finance for South Africa’s small, micro and medium enterprises (SMMEs), a research report commissioned by the National Credit Regulator (NCR), titled “Information Sharing and SMME Financing in South Africa” has found.

According to the report, acceptance rates for granting loans significantly improve when the financiers have access to suitable information about payment behaviour of small businesses. The default assumption is that insufficient information equals high credit risk.

Gabriel Davel, CEO of the NCR, commented that the establishment of a national register of credit agreements will improve the quantity and quality of information.

The report, put together by the Centre for Competitive Credit at the Political & Economic Research Council (PERC), found that the national credit register would be an ideal tool to promote information sharing of SMME data.

The risk faced by financiers of collateral being pledged more than once to different financiers could be mitigated by having a register of collaterals.

The report also found that by World Bank standards, South Africa has a remarkable level of SMME activity compared with similar economies.

The report says information solutions can help bridge the divide between the formal and informal economies by putting much-needed data in the hands of credit providers.

It found that SMMEs play an important role in the health of a country’s economic growth. A copy of the research report can be obtained from www.ncr.org.za/

Research_reports.html

— Witness Reporter.

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