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Credible risk: private credit bureaus and the work of loan officers in West Africa

Published online by Cambridge University Press:  30 September 2022

Vanessa Watters Opalo
Vanessa Watters Opalo*
Affiliation:
Northwestern University, Evanston, USA
*
Email: vwopalo@u.northwestern.edu
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Abstract

In 2015, the Central Bank of West African States selected a private credit bureau to build a digital platform to collect and analyse financial data across the eight-country West African Economic and Monetary Union, including the activities of credit cooperatives and microfinance agencies that serve many West African borrowers. The credit-reporting platform promises to produce new and valuable knowledge about borrowers’ creditworthiness and risk. But valuable in what ways and for whom? Private credit bureaus rely on vast arrays of personal and financial data in order to produce credit reports and consumer credit scores that claim to represent the creditworthiness of individual borrowers. Cooperative loan officers, instead, understand creditworthiness to be highly variable and rely on relational metrics in order to determine risk as well as carefully overseeing existing loans to ensure their timely repayment. Based on ethnographic fieldwork with loan officers at a small-scale credit cooperative in Lomé, Togo, this article examines how the impending arrival of a private credit bureau and new credit-reporting technologies highlights the distinction between the ways in which credit bureaus and loan officers understand the nature of financial risk, as well as the centrality of loan officers and their management of borrower debt in sustaining the field of small-scale lending in Togo.

Résumé

Résumé

En 2015, la Banque centrale des États de l’Afrique de l’Ouest a choisi un établissement privé de crédit pour développer une plateforme numérique destinée à collecter et à analyser des données financières dans les huit pays de l’Union économique et monétaire ouest-africaine, y compris pour les activités des coopératives de crédit et des institutions de microcrédit auxquelles ont recours de nombreux emprunteurs ouest-africains. Cette plateforme de reporting du crédit promet d’apporter des informations nouvelles et précieuses sur la solvabilité et le risque des emprunteurs. Mais précieuses en quelle manière et pour qui ? Les établissements privés de crédit s’appuient sur un vaste éventail de données personnelles et financières pour produire des rapports de crédit et des scores de crédit à la consommation qui affirment représenter la solvabilité des emprunteurs individuels. Les chargés de prêts coopératifs, quant à eux, conscients de la large variabilité de la solvabilité, s’appuient sur des métriques relationnelles pour déterminer le risque et surveiller attentivement les prêts existants pour s’assurer que les échéances de remboursement sont respectées. Basé sur des travaux ethnographiques menés sur le terrain auprès de chargés de prêts d’une coopérative de microcrédit de Lomé (Togo), cet article examine comment l’arrivée prochaine d’un établissement privé de crédit et de nouvelles technologies de reporting du crédit met en évidence la distinction les manières dont les établissements de crédit et les chargés de prêts comprennent la nature du risque financier, ainsi que le rôle central des chargés de prêts et leur gestion de la dette des emprunteurs dans le maintien du secteur du microcrédit au Togo.

Type
Capitalizing Africa
Information
Africa , Volume 92 , Issue 4 , August 2022 , pp. 625 - 643
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Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the International African Institute

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