1. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 1 Credit Reporting Systems in Africa Role of Public Sector Information in Risk Assessment 6 October 2006 Cape Town, South Africa

2. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 2 Public Sector Information and Risk Assessment Joachim C. Bartels Managing Director Business Information Industry Asia Pacific – Middle East Limited Hong Kong Stefano Stoppani Credit Bureau and Risk Management Advisor Global Financial Markets Development – International Finance Corporation

3. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 3 Agenda Value of Information and Economic Development The State of Information – Global Overview The Digital Divide in Lending How to Bridge the Digital Divide? General Discussion

4. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 4 Economic Benefits Information Economy More Stable Financial Sector Economic Growth with Lesser Need for a ‘Bail-out’ of Banks Stabilizes Allocation of Capital Accurate Risk Prediction Can Lend to Broader Risk Segments Pricing Reflecting Individual Risk Financial Sector Businesses Objective Assessment Better Access to Credit Quicker Reward for Responsible Credit Behavior Consumers More Accurate Information on Health of Financial Sector Bank Supervision

5. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 5 Credit and Information Strong Positive Linkages between Financial Sector and Economic Growth* Strong Linkage between Greater Access to Credit / Higher Bank Borrowings and Existence of Credit Information Companies or Credit Bureaus* * Source: World Bank ** Small and Medium Size Enterprises A Well-functioning Financial Sector Provides Individuals, SMEs** and Corporations with Access to Credit*

6. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 6 SMEs and the Problem of Obtaining Credit “The Difficulty of Obtaining Credit is Consistently Rated by SMEs as one of the Greatest Barriers to Operation and Growth” World Bank 2003 Study on Credit Reporting Estimates Based on Data on 5000 Firms in 51 Countries 49%28% High Financing Constraints Probability of Obtaining a Loan Source: World Bank

7. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 7 Relevance of Credit Bureaus49%27% % of Firms Reporting High Financing Constraints WithoutWith Credit Bureau Probability of Obtaining a Bank Loan 28% 40% WithoutWith Credit Bureau Source: World Bank

8. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 8 Impact on Availability of Credit Availability of Information Penetration of Credit < 33% 35 - 66% > 66% Subjective Credit Granting – High Risk - No Transparency High Credit Losses - Little Transparency Moderate Credit Losses – Accurate Risk PredictionUSA UK None High

9. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 9 Impact on Availability of Credit Availability of Information Penetration of Personal Credit < 33% 35 - 66% > 66% No Information Sharing No Credit Bureau No Information Sharing No Credit Bureau Negative Information only Positive and Negative Information Sharing with Credit Bureau Source: McKinsey & Company 2002 Subjective Credit Granting – High Risk - No Transparency High Credit Losses - Lack of Transparency Moderate Credit Losses – Accurate Risk Prediction Overall China Credit Penetration app.. 5%Overall China Credit Penetration app.. 5% ** Under Development USA UK Shanghai* JapanTaiwan Singap.* * India** KoreaHK China**

10. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 10 UK Example – Non-Performing Loan Provisions Pounds Sterling [000] McKinsey Report on State of UK Banking Recommending Greater Reliance on External Information and Credit ScoresRecommending Greater Reliance on External Information and Credit Scores McKinsey Report on State of UK Banking Recommending Greater Reliance on External Information and Credit ScoresRecommending Greater Reliance on External Information and Credit Scores UK Banks Revamped Credit Systems NPL Provisions

11. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 11 AGENDA Linkages: Value of Information and Economic Development Overview: State of Information

12. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 12 The Imperfect World of InformationThe Imperfect World of Information Attitudes and Infrastructure Impact Availability & ReliabilityAttitudes and Infrastructure Impact Availability & Reliability State of Information Complexity of Risk is GrowingComplexity of Risk is Growing New Demands on InformationNew Demands on Information Overcoming the Information DeficitOvercoming the Information Deficit Investment in Public / Private Sector InformationInvestment in Public / Private Sector Information

13. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 13 THE STATE OF INFORMATION 0 10 0 Effectiveness of Information in Credit Risk Assessment Country Infrastructure Government Legal IT Credit Business HR State of Registers, Information Exchange Mandated & Voluntary Disclosure Information Availability Thailand Pre 1990’sFinland

14. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 14 Government Legal Infrastructure COUNTRY INFRASTRUCTURE CRITERIA Communication Quality & Availability New IT Meeting Business Needs Data Security Enforced Communication Quality & Availability New IT Meeting Business Needs Data Security Enforced Information Infrastructure TransparencyTransparency Bribery and CorruptionBribery and Corruption Parallel EconomyParallel Economy TransparencyTransparency Bribery and CorruptionBribery and Corruption Parallel EconomyParallel Economy Legal Framework for CommerceLegal Framework for Commerce Justice – Dispensed FairlyJustice – Dispensed Fairly Rights & Responsibilities of ShareholdersRights & Responsibilities of Shareholders Legal Framework for CommerceLegal Framework for Commerce Justice – Dispensed FairlyJustice – Dispensed Fairly Rights & Responsibilities of ShareholdersRights & Responsibilities of Shareholders

15. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 15 Credit Infrastructure Human Resources Business Infrastructure COUNTRY INFRASTRUCTURE CRITERIA Economic LiteracyEconomic Literacy Education in FinanceEducation in Finance Finance SkillsFinance Skills Worker MotivationWorker Motivation Adaptability & Flexibility of WorkforceAdaptability & Flexibility of Workforce Ease of Doing BusinessEase of Doing Business Transfer of Know-howTransfer of Know-how Venture CapitalVenture Capital Insider TradingInsider Trading Cash Flow - Self FinancingCash Flow - Self Financing Ethical PracticesEthical Practices Credibility of ManagersCredibility of Managers Credibility of Corporate BoardsCredibility of Corporate Boards EntrepreneurshipEntrepreneurship Adaptability of CompaniesAdaptability of Companies Financial Institution TransparencyFinancial Institution Transparency Central Bank PolicyCentral Bank Policy Export Credit & InsuranceExport Credit & Insurance Confidentiality of Financial TransactionsConfidentiality of Financial Transactions Legal Regulation of Financial InstitutionsLegal Regulation of Financial Institutions Flow of Credit from Banks to BusinessesFlow of Credit from Banks to Businesses

16. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 16 Credit Acceptance of the Concept of Information Pooling Business Attitudes and Compliance Government Availability of Information Legal Requirement to Disclose INFORMATION AVAILABILITY Efficient Credit BureausEfficient Credit Bureaus Voluntary DisclosureVoluntary Disclosure Attitudes Towards Disclosure and TransparencyAttitudes Towards Disclosure and Transparency Reliability / Accuracy of DataReliability / Accuracy of Data Disclosure - SECDisclosure - SEC Disclosure - Filing of FinancialsDisclosure - Filing of Financials Availability of Court RecordsAvailability of Court Records Access to Court RecordsAccess to Court Records UCC Filings or EquivalentUCC Filings or Equivalent State of Public RegistersState of Public Registers Access to Public RegistersAccess to Public Registers ComplianceCompliance

17. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 17 Information Availability High Low High 0 1 2 3 4 5 6 7 8 9 10 Country Infrastructure Low High China Hong Kong Indonesia India Singapore Japan ASIA / PACIFIC Finland Australia Korea Philippines Malaysia New Zealand Taiwan Thailand Low Trend Up Trend Down No Change Source: IMD 2003 & IEI 2003 Surveys

18. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 18 Information Availability High Low High 0 1 2 3 4 5 6 7 8 9 10 Low Source: IMD 2003 & IEI 2003 Surveys Country Infrastructure Low High S. Africa Slovak R Poland Finland Czech R Romania Russia Hungary Turkey Slovenia Trend Up Trend Down No Change Germany France

19. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 19 D&B Country Risk Rating Information Availability Low Low Risk High High Risk Low Risk Finland 0 1 2 3 4 5 6 7 8 9 10 High Risk Pakistan Azerb Nepal Sri Lanka Bangladesh Georgia Kazakhstan Myanmar Vietnam Congo DR Tanzania Nigeria Zimbabwe Kenya Angola Algeria Peru Cuba Paraguay Source: D&B IRPR & IEI 2003 Surveys Bulgaria Ukraine

20. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 20 Country Infrastructure Information Availability High Low High Low High 6 7 8 9 10 6 7 8 9 10 Source: IMD 2004 & IEI 2003 Surveys FranceAustriaItalyFinland Denmark IrelandNetherlands SwedenBelgium Spain Portugal Germany POTENTIAL ROLE MODELS Trend Up Trend Down UK Switzerland

21. BIIA September 2006 FEBIS ANNUAL CONFERENCE 2006 - WWW.BIIA.COM - All Rights Reserved - 21 Market Characteristics Introduction to BIIA Content Information Market World Bank Survey

22. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 22 Agenda Value of Information and Economic Development The State of Information – Global Overview The Digital Divide in Lending World Bank Survey on Public Sector / Private Sector Information Relationship

23. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 23 The Digital Divide Short term bank and trade credit are the largest sources for short term capital The existence of bank & trade credit depends on accurate, reliable and timely information and credit management skills In many countries trade credit has not reached its full potential because of the lack of accurate, reliable and timely information caused by underdeveloped and dysfunctional public records infrastructures

24. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 24 The Imperfect World of Information Difficult to AccessDifficult to Access Paper BasedPaper Based Poor Quality – Out of DatePoor Quality – Out of Date Lax ComplianceLax Compliance Underdeveloped InfrastructuresUnderdeveloped Infrastructures Information is Secret!Information is Secret! Lack of Voluntary and Legal DisclosureLack of Voluntary and Legal Disclosure No Enforced ComplianceNo Enforced Compliance Lack of TransparencyLack of Transparency Attitudes of BusinessesAttitudes of Businesses How to Create Value ? ?

25. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 25 Digital Information and Credit Risk Assessment Public Sector Data Sources Private Sector Credit Information Private Sector Credit Grantors Private Sector Borrowers Value Creation and Impact on Economic Development

26. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 26 Digital Information and Credit Risk Assessment Private Sector Borrowers Private Sector Credit Information Private Sector Credit Grantors Public Sector Data Sources Low Value Creation Impaired Economic Development

27. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 27 From Data to Knowledge Public Sector Data Sources Private Sector Credit Information Private Sector Credit Grantors Private Sector Borrowers Raw Data Collection Data Validation Modeling External Internal Data Decision

28. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 28 CREDIT INFORMATION CYCLE Public Sector Information Register & Court Data Private Sector Creditors Private Sector Creditors Credit Behavior Credit Behavior Credit Grantors Risk Assessment Risk Assessment Credit Information Private Sector Value Added Information Private Sector Value Added Information

29. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 29 PRIMARY USERS Source: World Bank Survey 2006 % of Respondents

30. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 30 Public Sector – Private Sector Information Sources Public Sector Private Sector Business Registers Court System News Media Company News & Information Trade Directories CompulsoryVoluntary Private Sector Publications Trade Information Financial Statements Financial Statements Investigation Press Clippings Product Information Register Data Register Data Suits, Liens Judgments Suits, Liens Judgments Financial Statements Financial Statements Database

31. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 31 MOST FREQUENTLY USED DATA SOURCES Source: World Bank Survey 2006 % of Respondents

32. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 32 DEFICIENCIES IN PUBLIC SECTOR INFORMATION (PSI) Source: World Bank Survey on Business Credit Information and PSI % of Respondents

33. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 33 PSI – QUALITY AND RELATIONSHIP Source: World Bank Survey on Business Credit Information and PSI 1 – 10 Ranking

34. BIIA September 2006 FEBIS ANNUAL CONFERENCE 2006 - WWW.BIIA.COM - All Rights Reserved - 34 SUCCESS FACTORS

35. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 35

36. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 36

37. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 37

38. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 38 AGENDA Linkages: Value of Information and Economic Development Overview: State of Information How to Bridge the Digital Divide?

39. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 39 Data-Pooling (A) - Credit Bureaus -Data-Pooling (A) - Credit Bureaus - Bridging the Digital Divide Investments in Modern Information SystemsInvestments in Modern Information Systems Electronic Access to RegistersElectronic Access to Registers PartneringPartnering Value AddedValue Added Change ‘Mind Set’Change ‘Mind Set’ Broadening DisclosureBroadening Disclosure Encourage Voluntary DisclosureEncourage Voluntary Disclosure Improvement in Corporate GovernanceImprovement in Corporate Governance Value of TransparencyValue of Transparency Value of Information in Credit TransactionsValue of Information in Credit Transactions Value of Information PoolingValue of Information Pooling RegistersRegistersCourtsCourts Public Sector Central Banks International / National Central Banks International / National Credit Grantors (A) Information Suppliers (A) Information Private Sector

40. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 40 The Thai Example 0 10 0 Finland Country Infrastructure Information Availability Thailand Success Factors ?

41. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 41 The Thai Example Pre 1994 Paper Based No Online Distribution Paper Based No Online Distribution Registration Data Balance Sheets Ministry of Commerce Business Registration Public Sector Bankruptcies Auctions Ministry of Justice Court System How to Digitize Data? How to Provide Online Distribution? How to Digitize Data? How to Provide Online Distribution? Public Sector Initiative? Private Sector Involvement? Public Sector Initiative? Private Sector Involvement?

42. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 42 The Thai Example Private Sector Information Skills? Marketing Skills? Add Value? IT Skills? Proven Track Record? Information Skills? Marketing Skills? Add Value? IT Skills? Proven Track Record? Registration Data Balance Sheets Ministry of Commerce Business Registration Public Sector Bankruptcies Auctions Ministry of Justice Court System

43. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 43 The Thai Example ‘Business Online’ Database 760,000 Companies 7 Years of Financial Statements (Basel II) Data Company Register Bankruptcy Data Company Register Bankruptcy Information Company Reports Payment Information News Briefs from 20 Sources Information Company Reports Payment Information News Briefs from 20 Sources Private Sector (BOL) Public Sector From Data to Knowledge

44. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 44 AGENDA Linkages: Value of Information and Economic Development Overview: State of Information How to Bridge the Digital Divide? Role Model: Public Sector / Private Sector Partnership Example General Discussion

45. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 45 RECOMMENDATION Change ‘Mind Set’Change ‘Mind Set’ Broadening DisclosureBroadening Disclosure Encourage Voluntary DisclosureEncourage Voluntary Disclosure Improvement in Corporate GovernanceImprovement in Corporate Governance Value of TransparencyValue of Transparency Value of Information in Credit TransactionsValue of Information in Credit Transactions Value of Information PoolingValue of Information Pooling RegistersRegistersCourtsCourts Credit Grantors InformationSuppliersInformationSuppliers Public Sector Central Banks International / National Central Banks International / National Private Sector Investments in Modern Information SystemsInvestments in Modern Information Systems Electronic Access to RegistersElectronic Access to Registers PartneringPartnering Value AddedValue Added Data-PoolingData-Pooling - Credit Information Suppliers - - Credit Information Suppliers - - Credit Bureaus - - Credit Bureaus - Data-PoolingData-Pooling - Credit Information Suppliers - - Credit Information Suppliers - - Credit Bureaus - - Credit Bureaus -

46. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 46 Disclosure of Loan Information Closed User Groups vs. Credit Information % of Respondents Source: World Bank Survey 2006

47. BIIA October 2006 www.biia.com - All Rights Reserved 2006 - Business Information Industry Association Asia Pacific - Middle East Limited - 47 Credit Reporting Systems in Africa Thank You The presenter and BIIA are not responsible for the use which might be made of the information contained in this presentation or report. Nothing in this presentation implies or expresses a warranty of any kind. Presented by Joachim C. Bartels Managing Director of Business Information Industry Association Asia Pacific – Middle East Limited ieijcb@attglobal.net