Written by Chris Mfula and David Dolan | From Reuters

When Joyce Musonda wanted to start a business two years ago selling kitchen tiles from her backyard in an up-and-coming district of Zambia’s capital of Lusaka, she braced herself for a battle to find a start-up loan.

Her predicament is common: around 80 percent of sub-Saharan adults have no bank accounts and struggle to access finance from banks reluctant to lend to new customers, especially the small entrepreneurs for whom they have no history.

Musonda’s solution came from an unexpected quarter: she discovered that Zambia – wanting to encourage more middle-class business people like her – had set up a credit bureau to record her credit history and show her to be a reliable customer.

Within days, the bank had approved a $3,000 loan. Musonda now does brisk trade from the 20-foot steel container packed with Chinese-made floor tiles and roofing that sits in the yard of her freshly painted Lusaka home.

“Before the credit reference bureau I don’t think I could have been granted the loan with such ease,” said the 37-year-old.

Zambia’s credit bureau, set up five years ago, still only has data on 12 percent of the population, according to the World Bank. The numbers are even lower, or non-existent, in other African countries.

But gradually, at the urging of the World Bank – which has introduced programs in 19 sub-Saharan countries to promote the growth of credit bureaus – Zambia and other countries are doing more.

Making more entrepreneurs visible to banks not only increases the number of loans but in turn lifts the larger economy and creates employment – the ultimate goal.

“When there’s little information, then there’s little financing,” said Luz Maria Salamina of the International Finance Corporation (IFC), an arm of the World Bank.

“When you extend credit to a very small company or business and they expand their services, they impact society and they create jobs,” added Salamina, who leads an IFC program to promote the growth of credit bureaus in sub-Saharan Africa.

Read more at Reuters