Following a passionate defense of Vice President Dr. Mahamudu Bawumia’s assertion that Ghana lacks a personal credit-scoring system, Dr. Theo Acheampong, an economist and political risk analyst, has softened his stance in favor of the Vice President’s detractors.
Since publishing his findings on social networking site X, Dr. Acheampong claims to have done additional research on the topic and concluded that there is, in fact, a system of that kind in Ghana.
“Ghana’s Vice President Bawumia proposed last week on social media that the country will implement a credit score system for individuals early in 2024. There has been an interesting debate on this plan.We do not yet have a credit scoring system in place.
“I’ve had the opportunity to listen to the vice president’s remarks more intently and thoroughly and to speak with certain key players in Ghana’s financial industry more.
On Sunday, December 3, 2023, he wrote on X, “I am happy to issue this rejoinder to my earlier note based on this and the commitment I made on Bright Simon’s [@BBSimons] wall.”
Among other things, I stated in my post that “the Credit Bureaus’ products and services are not Individualized Credit Scoring.”
“In spite of their potential flaws, the two licensed credit bureaus now in operation—XDS Data Ghana Limited and Dun & Bradstreet Credit Bureau Limited—do in fact generate individual scores.
“I was mistaken in that aspect. In a same vein, Dr. Theo Acheampong stated that Dr. Bawumia could not have been entirely accurate in his statement.
Speaking late last month at a KNUST assembly in Kumasi, Dr. Bawumia disclosed intentions to introduce a customized credit-scoring system in Ghana the next year. He said that the Ghana card would serve as a catalyst for the system, which would help identify high-risk and low-risk borrowers.
Bright Simons, the Vice President of Imani Africa, questioned Dr. Bawumia’s declaration after it was made, arguing that it was incorrect because Ghana now has a credit rating system in place.
In response, Dr. Acheampong contended that Bright Simons misunderstood the circumstances, conflating credit reports to financial institutions with personal credit scores.
Dr. Theo Acheampong stated that Dr. Bawumia was fairly correct in a lengthy post on November 29, 2023, on X (previously Twitter), citing current records and practice to back up his claims.
Dr. Theo Acheampong wrote, “Dr. Bawumiah is correct in that there isn’t an individualised credit scoring system in Ghana.”
Dr. Theo Acheampong clarified that three credit bureaus “are involved in collecting credit data and providing credit referencing services to financial institutions,” not in credit scoring for individuals as Dr. Bawumia had claimed, citing the Bank of Ghana’s 2022 Credit Reporting Activity Report.
“It is important to note that the products and services offered by the Credit Bureaus are not INDIVIDUALISED CREDIT SCORING,” Dr. Theo Acheampong went on. Instead, there are six (forms) of these:”
“In other words, the current data provided by the credit bureaus are amalgamated reports comprising different data points such as personal details, credit account summary, address history, guarantor details and telephone history,” he said.
For various reasons, the companies are unable to integrate this data into a COMPOSITE CREDIT SCORE, which is necessary for the pricing of specific financial products and services. Examples of such companies in the UK where I work are Experian and TransUnion.
“I’ve included my Experian score, which is now rated outstanding at 961 out of 999, as proof. I can access a variety of things, such as credit cards, loans, insurance, and other financial items, with only this one number,” he said.
Dr. Bawumia stated that the Ghana card will be the new, personalized credit-scoring system during the announcement. Dr. Acheampong supported this as well, calling it “sensible.”
However, Dr. Theo Acheampomg acknowledged the viability of extending the current system by utilizing the Ghana Card in a subsequent post where he retracted his view on the subject.
Read the entire rebuttal from Dr. Theo Acheampong below:
COMMENT TO “DR. BAWUMIAH IS RIGHT: DEEPENING FINANCIAL ACCESS IS A MUST, AND A PERSONAL CREDIT-SCORING SYSTEM DOES NOT EXIST”
The idea put up by Ghana’s vice president, Bawumia, that “Ghana early next year  will be introducing a credit scoring system for individuals…right now, our credit scoring system does not exist,” has generated an intriguing discussion on social media during the past week.
I’ve had the opportunity to listen to the vice president’s remarks more intently and thoroughly and to speak with several key players in Ghana’s financial industry more.
In light of this and the promise I made on Bright Simon’s [@BBSimons] wall, I’m pleased to respond to my previous message with this one.
One of the claims made in my essay was that “the Credit Bureaus’ products and services are not Individualized Credit Scoring.”
Despite their potential flaws, the two licensed credit bureaus now in operation—XDS Data Ghana Limited and Dun & Bradstreet Credit Bureau Limited—do in fact generate individual scores.
I was mistaken in that regard. In this regard, Dr. Bawumiah’s claim might not have been entirely accurate.
The Way Ahead ——-
I still believe that it should be possible, given technical feasibility, to combine elements/data points from the Ghana Card in order to: (1) enhance the current individual credit scoring system in order to provide a more nuanced risk profile and, consequently, a lower cost of credit; and (2) extend the scoring to other population segments, particularly those who are not part of the formal economy but who use their Ghana Card as their primary form of identification. Why? For instance, Dun and Bradstreet, two of the current credit bureaus, pings and uses the exhibit that is attached, which is a “photograph of the customer obtained from Electoral Commission.”
As such, it ought to be feasible to establish supplementary data parameters about any individual by pinging the National ID Card database. Stated differently, the National Identification Authority (NIA) will include other organizations and businesses to the current list of twenty-two (22) that are officially recognized as credit reporting system data suppliers [and authorized users]. In this scenario, NIA will function more as a data source. As of February 2023, approximately 17 million Ghanaians had registered for the Ghana Card, according to the National Identification Authority (NIA).
That opens up the possibility of 17 million distinct searches, maybe even more. According to the 2022 Bank of Ghana Credit Report (p. 11), 85% of credit report receivers’ queries in credit bureau databases produced some “only demographic or both demographic and financial data.” This was a better result than the 54% in 2021 since there were more “hits” from mobile money loan borrowers. Put differently, in the absence of the MoMo data, the three-year hit rate would have likely averaged 61% between 2021 and 2018. This indicates to me that there are flaws in the system, which affects the scores as well. To improve it in that sense, we need to figure out how to add more data points, and the Ghana card could be able to assist. More utilisation of the national ID system could be beneficial, according to a 2015 SEEP Network research, which stated that “there is no single unique identifier within the licensed credit bureau market”.
Second, I would suggest that the government collaborate with XDS Data Ghana and Dun and Bradstreet to launch an APP, WEB PORTAL, and USSD that would enable Ghanaian citizens to instantly and freely check their individual credit score and basic report using only their name and unique National ID Card Number. If they would want, they can then use the app to pay a predetermined fee for a complete credit report. The government and the credit agencies can work out a revenue-sharing agreement.
We appreciate everyone participating in this hotly debated policy discussion.
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