The Nairobi Lab, established by Mastercard in 2015, plans to use SMS and USSD technologies to address the challenge posed by the lack of critical data which continues to hamper financial inclusion in Africa.

This is according to Salah Goss, Vice President and the Head of Lab for Financial Inclusion at Mastercard who said that the availability of historical information only is dissuading lenders from offering credit to prospective partners.

Goss explained that basic economic activities are not fully digitised in most rural economies and this fuels the lack of credible data. This, in turn, puts financial players off from extending credit, which perpetuates the financial exclusion issue.

"What we are doing is facilitating the normal relationship between someone who is taking credit - a merchant and a bank. So we are putting those entities together so that relationship is governed with the same rules that would govern someone and their bank."

The Lab is piloting three products: Mastercard Farmer Network (MFN), an education payment enabler Kupaa and Kionnect, which helps small traders secure access to credit.

MFN provides farmers with a digital identity when transacting and thereby develop a trading history. The solution is believed to have reached over 50,000 farmers in Uganda, Tanzania and India.

Kupaa has enrolled 350 schools and over 160,000 students mostly in Uganda, while Kionnect has connected 18,000 Unilever Kenya retailers to Kenya Commercial Bank (KCB) for credit advancement.

Tough regulations for Credit Bureaus

Meanwhile, the government has published draft regulations on how credit bureaus handle customer data.

Under the draft regulations, the Central Bank of Kenya will have ownership of data collected by bureaus.

"The information held by the Bureau shall remain the property of the Central Bank and where a Bureau winds up, the information shall revert to the Central Bank," it said.