The Vice President, Dr. Mahamudu Bawumia, has announced that Ghana’s biometric national identity card, the Ghana Card, will be the foundation of a new credit-scoring system.
Dr. Bawumia made the announcement during the KNUST congregation last Friday.
He stated that, the new credit-scoring system, which will identify high and low-risk borrowers, will be introduced next year.
“Ghana, early next year, will be introducing a credit-scoring system for individuals,” Dr. Bawumia said.
“Every individual will have a credit score. Right now, our credit-scoring system does not exist, so everyone is seen as risky, and interest rates are high.
As part of my speech at KNUST on Friday, I noted that next year, Ghana will introduce a robust credit scoring system for individuals which will be anchored on the Ghanacard. pic.twitter.com/nRtlJ81yD0
— Dr. Mahamudu Bawumia (@MBawumia) November 28, 2023
“But we are going to move into individualized credit scoring. So if you don’t pay your loans, you’ll have a low credit score, and if you go for a loan, you’ll have a problem. But if you are diligent in paying your loans, your credit score will be high, and you’re likely to get a lower interest rate and you’ll have more discipline as a result.”
The Vice President explained that, the Ghana Card, which contains the biometric details of every holder, will be the anchor of the new credit system. This means that anyone accessing any credit facility can be identified from various sources, significantly reducing risks and helping to bring down interest rates.
He also explained that the credit-scoring system, with the Ghana Card as security, will help many to buy even cars on credit. He noted that some car manufacturers in Ghana, including Solar Taxi, have expressed willingness to provide cars on credit to consumers, allowing them to repay over time.
A credit-scoring system is a statistical analysis used by financial institutions and lenders to assess a borrower’s creditworthiness. It helps the lender determine who is a high-risk or low-risk borrower. An individual’s credit score can determine the maximum loan amount they can borrow and the interest rate applied.
In countries without individualized credit-scoring systems, everyone is considered a high-risk borrower, generally affecting interest rates, which are typically high across the board.
