A Vice President of Imani Africa, Bright Simons, has told the spokesperson of the Vice President Dr Gideon Boako that the issues that exist in credit-scoring are not unique to Ghana and cannot be solved by Ghana Card.
This was after Dr Boako said that the new credit scoring system being proposed by the flagbearer of the New Patriotic Party (NPP) Dr Mahamudu Bawumia would spur further innovation and create opportunities that will modernize and grow the economy.
The Vice President’s spokesperson explained that the upcoming national credit scoring system is backed by data from an individual Ghana card and will utilize a much broader range of data sources, including demographic data, financial transactions, utility payments, employment records, and other asset ownership data.
This comprehensive data coverage, he said, provides a more accurate and holistic assessment of an individual’s creditworthiness, particularly for those with limited or no credit history.
Dr. Bawumia announced at the 57th congregation of the Kwame Nkrumah University of Science and Technology that Ghana will introduce a credit scoring system next year to allow Ghanaians access to personal loans and also help financial institutions control the allocation of risks and costs with their client
It was his view that the credit system would ensure discipline in the payment of loans.
“Ghana early next year will be introducing a credit scoring system for individuals. Every individual will have a credit score. Right now, our credit scoring system does not exist.
“So, everybody is seen as risky and the interest rates are high. But we are going to go into individualized credit scores. So, if you don’t pay your loan, you will have no credit score and you will have a problem when you go for a loan. But if you are diligent in paying your loans you get your high credit score and you are likely to get lower interest rates. This will bring more discipline,” he said.
Dr Bawumia‘s policy proposal received flak from some analysts including Vice President of Imani Africa Bright Simons and a professor at the University of Ghana, Kobby Mensah who cast doubt on the ability to roll out such a policy.
In a post shared on X on November 28, 2023, Prof Mensah asked why the Ghana Card is not being used to acquire vehicles because there are garages in Ghana already.
“Are we not in Ghana? Are there no garages in Ghana? If the answers to these questions are yes, then the case is simple.
“Take your Ghana card to CFAO to pick up a Mercedes and let’s prove the theory,” he wrote
But Dr Gidoen Boako also said in a post on his X platform that “I have read what my friend Bright Simons wrote about Ghana’s credit scoring system. It may interest you to read the following in order to appreciate where we are as a country and where we are going as far as credit scoring is concerned.
“…By incorporating data from these comprehensive sources, the new credit scoring system can effectively reach individuals who are currently excluded from traditional credit reporting systems. This increased financial inclusion will enable the mass of Ghana’s population to access more formal financial services, such as loans, mortgages, and insurance services, which can significantly improve their economic opportunities.
“The comprehensive data insights that will be provided by the new credit scoring system will enable lenders of all kinds (not just banks) but also employers, landlords, car dealers, insurance companies, telcos, mobile handset dealers, entrepreneurs and the like to make more informed risk assessments to spur an entirely new era of lending practices that underpins every modern economy of today’s world.”
Replying to him, Bright Simons said “Thanks. I will respond substantively after my meetings today. However, the summary is that: your data is out of date, some of your proposals are problematic, & most important of all, the issues that exist in credit-scoring are not unique to Ghana & can’t be solved by Ghana Card.”
Below is Dr Boako’s full post…
I have read what my friend @BBSimons wrote about Ghana’s credit scoring system. It may interest you to read the following in order to appreciate where we are as a country and where we are going as far as credit scoring is concerned.
Credit scoring System
As part of Government’s Citizens App platform that will be launched in the first quarter of 2024, a national credit scoring system will be implemented to close the yawning gaps and deficiencies of the existing credit reference bureau which have prevented them from being able to undertake credit scoring for over 80% of adults in Ghana. How can we have a credit scoring system that excludes over 80% of eligible borrowers? The okada rider, the Kayayei, the shoe shine boy, the peasant farmer, and the maid who may not have bank accounts should be able to have their credit scores to enable them access credit. They should not be excluded.
It should be noted that:
- The existing credit reference systems have bank-led operating models. Ghana’s financial sector has however now expanded beyond traditional banks. There are now mobile money issuers, payment service providers, card issuers, and several fintechs who are driving the space. Ghana now has a predominantly mobile money-led financial sector thus a new system is required to open up credit opportunities for the over 22 million active mobile money users.
The new credit scoring system will allow all these players to access and contribute to an individual’s credit history. This will spur further innovation and create opportunities that will modernize and grow our economy.
- The upcoming national credit scoring system is backed by data from an individual Ghana card and will utilize a much broader range of data sources, including demographic data, financial transactions, utility payments, employment records, and other asset ownership data. This comprehensive data coverage provides a more accurate and holistic assessment of an individual’s creditworthiness, particularly for those with limited or no credit history.
- By incorporating data from these comprehensive sources, the new credit scoring system can effectively reach individuals who are currently excluded from traditional credit reporting systems. This increased financial inclusion will enable the mass of Ghana’s population to access more formal financial services, such as loans, mortgages, and insurance services, which can significantly improve their economic opportunities.
- The comprehensive data insights that will be provided by the new credit scoring system will enable lenders of all kinds (not just banks) but also employers, landlords, car dealers, insurance companies, telcos, mobile handset dealers, entrepreneurs and the like to make more informed risk assessments to spur an entirely new era of lending practices that underpins every modern economy of today’s world.
- In the advanced countries where credit scoring takes place, everybody knows or can find out their credit score at anytime. If you are in Ghana where credit reference bureau operate, do you know what your credit score is? Can you find out your credit score? The answer is “no” to both questions. With the new national credit scoring system, everyone with a Ghanacard should be able to find out their credit score online. It is a new credit scoring system.