VEEP launches new individual credit scoring system
Vice President Dr Mahamudu Bawumia has unveiled a new credit scoring system that is aimed at improving access to finance.
The mycreditscore system seeks to provide timely and accurate information on the debt profile and repayment history of borrowers.
The system is designed to reduce information asymmetry between borrowers and lenders and enable financial institutions to make informed decisions on credit allocation thereby reducing default probabilities of borrowers as they seek to meet their obligations in a timely manner.
It will among other things enable the central bank to monitor systematic risks on an aggregate basis, promote the development of a mortgage market, and enhance financial stability and efficient allocation of resources in the Ghanaian economy.
Speaking at the launch, Dr Bawumia observed that since 2007, when the Credit Reporting Act was passed, licensed credit reporting bureaus have had difficulty in providing individualised credit scores for borrowers.
He attributed this to several challenges, including the lack of a unique identity database for Ghanaians, the absence of a functional property address system, the large unbanked adult population in Ghana (estimated at about 60 to 70 percent), and the failure to integrate individual data across various databases.
“So, when we came back into office in 2017, I was keenly aware of what we needed to do to get broad-based individualised credit scoring to take off in Ghana.
“And this is partly the reason we emphasised very quickly that we needed to proceed with issuing the Ghana card so that every individual Ghanaian can be uniquely identified,” he said.
The Vice President noted that the government had laid the foundation for credit scoring to take off through interventions such as the digital property address system, implementation of mobile money interoperability and introduced the Citizens App Data Interoperability System (CADIS) for data integration.
Mr. Osei Gyasi, Head of Banking Supervision, Bank of Ghana highlighted the challenge of inadequate data submission by Specialised Deposit-Taking Institutions (SDI) and the delay in submission, which could affect the adequacy and accuracy of credit bureau data.
“I would therefore encourage credit reference bureaus to be innovative, including collaborating with these SDIs and financial technology firms to deploy working solutions to facilitate data submissions by these institutions,” he said.
He also emphasised the need to put in place the right safeguards and security to protect customer data and privacy.
Mr. John Awuah, Chief Executive Officer (CEO) of the Ghana Association of Banks said the system would help banks to operate more efficiently, provide fairer access to credit, and foster economic growth throughout the economy.