Newly Privatized Discos continue to suffer low revenue generation as a result of the non-utilization of credit bureaux to shape consumers’ credit behaviour into consistent and timely payments of utility bills.
Credit bureaux often rely on transaction data of users from both bank and non-bank institutions including hotels, auto dealers, insurance companies, electricity providers, retailers and utility companies in order to provide comprehensive credit information of service consumers.
“Utility companies are yet to come on board as non-bank institutions that provide credit bureaux with user data”, said Tunde Popoola, MD CRC Credit Bureau, at the 2nd Annual Credit Reporting Conference held yesterday.
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“We go after a lot of non-bank data because most users conduct most of their businesses outside the banks”, he said further.
The implication of this is that there is no enforcement that compels consumers of utility services to pay consistently and on time, as they do not see a direct impact on their credit ratings with traditional financial institutions.
In more developed economies, providers of utility and services that require credit, whether short term or long term are mandated to report data to credit bureaux. This has shaped consumer behaviours into honouring obligations for fear of repercussions on their credit history and credit rating.
Collection losses in the power sector are about 40 – 50 per cent of revenues. According to a source at NERC, “Only 6,000 homes out of 430,000 homes in Lagos pay for the electricity distributed in Lagos.”
This has greatly impeded the recuperation of capital investments of the already highly indebted private operators.
“Energy theft is still a lingering issue in the retail side of the power market”, says Oladele Amoda, MD/CEO of Eko Disco. “Theft acts include tampering with meters, meter-bypass, illegal connections and illegal reconnection after being disconnected for non-payment of bills.”
Besides the utility firms, telecommunication firms, public registrars and tax authorities amongst others are yet to come on board as data providers to credit bureaux.
Non-bank institutions currently providing data include travel, hotels and hospitality firms, insurance firms, retailers, pharmaceuticals, auto dealers, leasing companies and courier services.
Credit bureaux generally act as the de facto infrastructure that catalyses access to credit in economies.
Unreliable or insufficient electricity, corruption, and difficulty in getting bank loans remain the three biggest constraints to doing business in Sub-Saharan Africa (SSA), according to recent Africa survey released by Good Governance Africa (GGA).
“Improving electricity supply and access to loans and wiping out corruption would encourage entrepreneurship and allow companies to expand their operations,” said Karen Hasse, a GGA researcher.
Hope Moses-Ashike, Edozie Ifebi, Yinka Abraham & Daniel Ojabo
