BoG Piloting “Intent-to-Pay” Credit Assessment Model For SMEs; Already Facilitated GHS 8m In Collateral-free Loans to 20 SMEs
Dr. Ernest Addison, Governor of the Bank of Ghana, has unveiled a pioneering “intent-to-pay” credit assessment model aimed at boosting access to finance for small and medium-sized enterprises (SMEs).
Launched under the Central Bank’s regulatory sandbox program, this initiative has already facilitated GHS8 million ($1.38 million) in collateral-free loans to 20 Ghanaian SMEs.
Addressing the 2024 SME Growth and Opportunity Summit, organized by the Ministry of Finance, Dr. Addison detailed how the “intent-to-pay” model utilizes digitally verified information to assess SME creditworthiness, eschewing the traditional reliance on balance sheet strength and collateral.
The model employs Application Programming Interface (API) integrations with key government and private sector data sources, enabling independent data verification to create trusted digital credentials.
“A key aspect of the GIFE initiative, which is germane to today’s dialogue, is the “intent-to-pay” credit assessment model. This model uses digitally verified SME information to facilitate credit assessment without solely relying on traditional balance sheet strength or collateral requirements. It relies on Application Programming Interface (API) integration with key Government and private sector data sources to perform independent data verification for the development of trusted digital credentials.
“Currently undergoing testing in the Bank of Ghana’s regulatory sandbox, this model has already facilitated GHS8 million in collateral-free loans to 20 Ghanaian SMEs,” remarked the Governor.
Dr. Addison speaking further underscored the initiative’s potential to alleviate the chronic financing challenges faced by SMEs.
He noted that as the project scales, more financial institutions are expected to join, expanding the availability of credit facilities to the SME sector.
“As the initiative expands, more partner financial institutions are expected to join, offering additional credit facilities to Ghanaian SMEs. While still in its early stages, the GIFE initiative shows a promising potential to significantly alleviate SME financing challenges and highlights the transformative power of collaborative efforts of regulators and the private sector, leveraging innovative FinTech solutions, in overcoming financing challenges of SMEs,” the Governor added.
While still in its nascent stages, the initiative demonstrates the transformative potential of collaborative efforts between regulators and the private sector, harnessing innovative FinTech solutions to overcome financial barriers for SMEs.
The Ghana Integrated Financial Ecosystem (GIFE), is a comprehensive financial development programme that provides SMEs with financial and digital literacy training, as well as offers the opportunity for SMEs to obtain trusted digital credentials, enhancing their access to financial services and cross-border trade connectivity.
In essence, the programme seeks to adequately prepare local SMEs with the requisite skills, tools, and endorsements to make them trusted and capable participants in the international trade arena.
