Dr. Mahamudu Bawumia, the NPP’s vice president and presidential candidate, has introduced myCreditScore, a customized credit reference and scoring system for Ghanaians.
The Credit Score System, which is supported by the Central Bank, gives Ghanaians the chance to openly show their creditworthiness through a rating system. It also makes it easier for Ghanaians to obtain credit.
People who get points for proving their creditworthiness will be rewarded by financial organizations for their financial responsibility by being granted access to more credit through the credit scoring and reference system.
Dr. Bawumia called Thursday’s launch of the historic credit scoring system in Accra a “momentous occasion” and 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,” Dr. Bawumia stated, adding that the introduction of myCreditScore marks “yet another chapter in the nation’s ambitious journey toward financial inclusion.”
“MyCreditScore introduces a critical tool that transforms Ghanaians’ access to credit and also addresses age-old challenges related to lending and borrowing,” said Dr. Bawumia, the project’s lead. “The financial sector will be able to accurately access the credit worthiness of individuals, which he believes will help address high lending rates.”
“The lack of a credit information system therefore increases the risks of lending, and causes financial institutions to provide less credit. A credit reporting system in Ghana would provide timely, accurate, and up – to – date information on the debt profile and repayment history of borrowers and would lead to a number of benefits, Dr. Bawumia said.
“This initiative comes at a crucial time for Ghana’s financial sector. Recent data from CEIC Data reports that as of August 2024, Ghana’s non-performing loan (NPL) rate stands at a troubling 24.3%, with an unprecedented peak of 26.7% earlier this year.,”
“Such high NPL levels reflect challenges within our financial ecosystem, where the lack of a standardized, transparent credit scoring system has contributed to elevated risks for lenders and limited financial inclusion for borrowers.”
“The introduction of MyCreditScore represents a pivotal step toward addressing these challenges, aligning Ghana’s credit ecosystem with international standards and promoting a culture of responsible borrowing.”
Dr. Bawumia expressed hope for the launch, pointing out that a pilot study has already shown promising results.
“Results from the MyCreditScore pilot demonstrate a stark improvement, achieving an NPL ratio of just 1.4%—a remarkable contrast to the 20.7% average reported in 2023 by the Bank of Ghana.”
Dr. Bawumia expressed further optimism that by enabling a fairer and more consistent evaluation of creditworthiness, MyCreditScore is expected ”to reduce defaults significantly, strengthen confidence among financial institutions, and expand access to credit for individuals and businesses alike.”
“The initiative reflects a broader commitment to sustainable economic growth, where financial stability and trust in credit practices play foundational roles,”
“With the implementation of systems like MyCreditScore, Ghana is poised to transition into a financial ecosystem that not only facilitates responsible borrowing and lending practices but also drives economic resilience and inclusive growth for all stakeholders.”
Dr. Bawumia expressed his happiness at the realization of a customized credit scoring system for Ghana and recounted how the process began in 2007 when he was the Bank of Ghana’s Deputy Governor and the Credit Scoring Act was passed by Parliament.
However, he pointed out that after the 2009 government transition, the project did not continue.
“The purpose of the Credit Reporting Act (Act 726) is to provide a legal and regulatory framework for credit reporting in Ghana. The availability of credit information is generally accepted to be crucial for the development and maintenance of an effective financial sector. Borrowers tend to have a natural incentive not to reveal negative information about themselves,” he said.
According to Dr. Bawumia, the introduction of MyCreditScore is just another example of a successful collaboration between the public and private sectors.
In addition to thanking the Bank of Ghana and other players for helping to make MyCreditScore a success, Dr. Bawumia praised the creativity of the local business sector, pointing out that they have created all of the digitalization projects he has supported.
Source: newsthemegh.com