Ghana’s rapidly expanding digital lending market, worth billions of cedis in mobile-based loans each month, risks financial instability unless the Bank of Ghana (BoG) standardizes how fintech firms set interest rates, economist Professor Peter Quartey has warned.
Speaking at the 2025 Fintech Stakeholder Forum in Accra, the former Director of the Institute of Statistical, Social and Economic Research (ISSER) called on the BoG to establish a clear benchmark for determining digital loan rates, similar to the Ghana Reference Rate (GRR) system used by traditional banks.
According to Prof. Quartey, the absence of a standardized formula has created inconsistencies, unfair pricing, and rising borrower defaults — trends that could undermine confidence in the fintech credit market.
“We need a clear benchmark for determining interest rates,” he said. “Just as banks use the Ghana Reference Rate plus a margin, digital lenders should operate within similar guidelines. When rates are too high, defaults rise; when too low, lenders lose profitability. A regulator-backed formula ensures balance and protects both sides.”
The forum, organized by MobileMoney Ltd. under the theme “Harnessing Ghana’s Fintech Potential: Regulatory Frameworks for Digital Credit and Digital Assets,” brought together regulators, fintech firms, banks, and policy experts to discuss strengthening Ghana’s digital finance ecosystem.
Prof. Quartey’s recommendations were based on new research into digital credit behavior and market readiness in Ghana’s fintech sector. The study revealed wide disparities in loan rates, repayment patterns, and credit risk management across providers.
Key findings included:
- Regional trends: Accra and Kumasi recorded the highest loan volumes due to population size and digital penetration.
- Borrower behavior: Men typically borrowed higher amounts, while younger users — especially those in their 20s and 30s — showed greater default tendencies.
- Repayment patterns: About 40% of MTN borrowers repaid loans in full, over 50% partially defaulted before paying up, and roughly 5% failed to repay entirely.
Prof. Quartey linked rising defaults to high interest rates, weak borrower assessment, economic hardship, and limited financial literacy. He emphasized the need for stronger credit scoring systems and improved financial education, noting that repayment discipline tends to improve with age.
The study also assessed Ghana’s digital finance infrastructure, rating network coverage and agent density as strong, but identifying data costs, network reliability, and weak credit-scoring systems as persistent challenges.
While many fintechs use AI and machine learning to assess creditworthiness, Prof. Quartey cautioned that the absence of standardized datasets and regulatory oversight exposes the system to bias and errors.
He concluded that without a transparent, regulator-backed formula for digital lending rates, Ghana’s fintech-driven credit expansion could face long-term sustainability risks.
