By: Mercy Darko
As part of efforts to deepen financial inclusion, the Vice President Dr Mahamudu Bawumia has officially outdoored the much talked about Credit Score System for the country. Dubbed “myCreditScore”, the system will make it easier for the ordinary Ghanaian to purchase essentials such as mortgages, cars, mobile phones and obtain loans with the assurance of repayment based on their credit report with paying for the items upfront.
Addressing key stakeholders in Accra, Bawumia indicated that the Credit Score will align Ghana’s credit ecosystem with international standards while promoting a culture of responsible borrowing, stressing that this landmark initiative is a pathway to opportunities to unlock the potential of every Ghanaian where financial empowerment is within everyone’s reach.
“The credit reporting system will provide timely, accurate and up to date information on the debt profile and history of borrowers and will lead to a number of benefits including the reduction of information assymmetry between lenders and borrowers enabling financial institutions to make informed decisions about the allocation of credit, reducing default propabilities of borrowers as they seek to meet their obligations in a timely manner, improving access to credit facilities by SMEs, baling the Bank of Ghana to monitor systematic risks on aggregate basis and also promote the mortgage market”.
Dr. Bawumia indicated that the credit score is dream come true which will help reduce the risk of lending while enableling financial institutions to make informed decisions to improve access to credit facilities. He was excited that his vision during his days at the Bank of Ghana has finally materialised.
“Today I am thrilled to join you for this momentous occasion to take a step forward in building a dynamic credit economy for Ghana and for all Ghanaians. It is a significant milestone in Ghana’s journey toward a financially inclusive and empowered society, and it is driven by the private sector. This occasion represents yet another chapter in our nation’s ambitious journey toward financial inclusion. Decades of dedicated progress have laid the foundations that make today possible. For me, it has been a journey of over 17 years”.
The Vice President touching on the prospects of the credit score said with the systems put in place, Ghana credit score system can be better than that of some developed economies.
“The credit reporting system will provide timely, accurate, and up-to-date information on the loan rate, and will help to improve credit quality. It also provides the opportunity to bring freedom to credit payments from the banks and the credit institutions. The credit reporting system will provide the opportunity to reduce the risk of debt loss and reduce the risk of credit loss from borrowers and lenders”, he noted.
“With what we are putting together in Ghana with CADIS and the integration of our various databases, our credit score, the information content of the credit score in Ghana is going to be much higher than in many other advanced nations. We don’t have the level of data integration that we are building in Ghana. This system is a pathway to opportunity, helping unlock the potential of every Ghanaian. By creating a credit system that is open, reliable, and fair, we are setting the stage for a future where financial empowerment is within everyone’s reach. With this launch, we are not going to be like the United States, Canada, or the UK But we are starting a process that with time, our system will be just like theirs, and probably better than theirs”, he added.
The Head of Banking Supervision, at the Bank of Ghana, Osei Gyasi called for more education on the credit score system.
“Data security and privacy and its attendant legal and reputational risks also remain a major risk in the credit bureau space. There is therefore the need to put in place the right safeguards and security to protect customer data and privacy. The Bank of Ghana will continue to create an enabling environment to support all credit reference bureaus in developing the credit market in Ghana. We will urge all credit bureaus and financial institutions to undertake customer education and awareness to sensitize them on the importance of their services, including credit scoring and their credit delivery system. The Central Bank, Bank of Ghana, will support such initiative while ensuring that credit scoring is standardized within the credit bureau space to enhance its effective delivery and relevance to both providers and consumers of credit”.
The Board Chairman of the “MyCreditScore”, Augustin Adjei Gyadu said the credit score is timely for the country when electronic transactions have surged. He indicated that system which has been piloted over the last six months has shown positive prospects.
“As our pilot program has shown encouraging results since its launch in mid-April of this year. To date, we have seen about 40,700 credits extended, totaling 637,799 Ghana CDs to well over 4,000 borrowers. Remarkably, our default rate stands at just 2.51%, with only 191 borrowers, or 4.27% of the total borrowers. Defaulting, a significant improvement compared to the default rate of 4%.
Additionally, while Ghana’s non-performing loan ratio was at a high of 24.3% in August this year, our pilot NPO ratio is just 3.44%, showcasing the potential for responsible lending through data-driven insights.
The credit score platform will summarise how well people repay debt overtime. Individuals who display good credit behaviour with high scores will be able to access larger credit.
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