<\/p>\n
After arguing vehemently in support of Vice President Dr Mahamudu Bawumia\u2019s claim of Ghana not having a personal credit-scoring system, economist and political risk analyst Dr Theo Acheampong has beat a retreat in favour of the Vice President\u2019s critics.<\/strong><\/p>\n According to Dr Acheampong, he has since his publication on social media platform X, conducted further research on the subject matter and come to the conclusion that such a system indeed does exist in Ghana.<\/p>\n \u201cThere\u2019s been an interesting debate the past week on social media on the proposal by Ghana\u2019s VP Bawumia \u201cthat Ghana early next year [2024] will be introducing a credit scoring system for individuals\u2026right now, our credit scoring system does not exist\u201d.<\/p>\n \u201cI\u2019ve had the chance to listen more carefully and fully to what the VP said and consult more with some stakeholders in Ghana\u2019s finance space.<\/p>\n \u201cBased on this and the commitment I made on Bright Simon\u2019s [@BBSimons] wall, I am happy to issue this rejoinder to my earlier note,\u201d he stated in an X post on Sunday, December 3, 2023.<\/p>\n \u201cMy article asserted, among others, that \u201cthe products and services offered by the Credit Bureaus are not INDIVIDUALISED CREDIT SCORING\u201d.<\/p>\n \u201cIn fact, the existing licensed credit bureaus\u2014namely XDS Data Ghana Limited and Dun and Bradstreet Credit Bureau Limited\u2014 do produce individual scores, however imperfect they may be.<\/p>\n \u201cIn that regard, I was wrong. Relatedly, Dr Bawumia could not have been fully correct in his assertion,\u201d Dr Theo Acheampong added.<\/p>\n Speaking at a congregation of KNUST in Kumasi late last month, Dr. Bawumia announced plans to roll out a personalised credit-scoring system in Ghana next year, with the Ghana card as a catalyst for the system, which he said, would help distinguish between high and low-risk borrowers.<\/p>\n Following Dr. Bawumia\u2019s announcement, a Vice President of Imani Africa, Bright Simons, questioned the Vice President\u2019s statement, claiming it was wrong because there is currently a credit scoring system in Ghana.<\/p>\n But in a rebuttal, Dr Acheampong argued that Bright Simons got his understanding of the situation wrong, as he confused credit reports to financial institutions with credit scoring of individuals.<\/p>\n In a lengthy post on X (formerly Twitter) to explain the issues, Dr. Theo Acheampong on November 29, 2023, said Dr. Bawumia was rather right because current records and practise support him.<\/p>\n \u201cDr Bawumiah is right in the sense that an INDIVIDUALISED CREDIT SCORING does not exist in Ghana,\u201d Dr. Theo Acheampong wrote.<\/p>\n Referencing the Bank of Ghana\u2019s 2022 Credit Reporting Activity Report, Dr. Theo Acheampong explained that what is in existence, by three credit bureaus \u201care involved in collecting credit data and providing credit referencing services to financial institutions,\u201d and not credit scoring for individuals, as announced by Dr. Bawumia.<\/p>\n Dr Theo Acheampong continued: \u201cIt is important to note that the products and services offered by the Credit Bureaus are not INDIVIDUALISED CREDIT SCORING. Rather, these come in six (forms), namely:\u201d<\/p>\n \u201cIn 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,\u201d he explained.<\/p>\n \u201cThe companies, for one reason or another, are unable to combine this information into a COMPOSITE CREDIT SCORE such as offered by the likes of companies like Experian and TransUnion here in the UK where I am based, and which can allow the pricing of individual financial products and services.<\/p>\n \u201cIn terms of evidence, I have attached my Experian score, which currently sits at 961 out of 999 and is rated excellent. With this single number, I can access various products, including credit cards, loans, insurance, and other financial products,\u201d he stressed.<\/p>\n During the announcement, Dr. Bawumia added that the Ghana card will be the new individualised credit-scoring system. This, Dr. Acheampong also backed, describing it as \u2018sensible\u2019.\u201d<\/p>\n However, in his recent post recanting his position on the matter, Dr Theo Acheampomg noted the feasibility of expanding the current existing system by leveraging on the Ghana Card.<\/p>\n Read Dr Theo Acheampong\u2019s full rejoinder below:<\/p>\n REJOINDER TO \u201cDR BAWUMIAH IS RIGHT: A PERSONAL CREDIT-SCORING SYSTEM DOES NOT EXIST, AND IT IS A MUST TO DEEPEN FINANCIAL ACCESS\u201d<\/p>\n There\u2019s been an interesting debate the past week on social media on the proposal by Ghana\u2019s VP Bawumia \u201cthat Ghana early next year [2024] will be introducing a credit scoring system for individuals\u2026right now, our credit scoring system does not exist\u201d.<\/p>\n I\u2019ve had the chance to listen more carefully and fully to what the VP said and consult more with some stakeholders in Ghana\u2019s finance space.<\/p>\n Based on this and the commitment I made on Bright Simon\u2019s [ My article asserted, among others, that \u201cthe products and services offered by the Credit Bureaus are not INDIVIDUALISED CREDIT SCORING\u201d.<\/p>\n In fact, the existing licensed credit bureaus\u2014namely XDS Data Ghana Limited and Dun and Bradstreet Credit Bureau Limited\u2014 do produce individual scores, however imperfect they may be.<\/p>\n In that regard, I was wrong. Relatedly, Dr Bawumiah could not have been fully correct in his assertion.<\/p>\n Subject to technical feasibility, I still think that it should be possible to incorporate elements\/data points from the Ghana Card to (1) improve on the existing individual credit scoring with a view of offering a more nuanced risk profile and, therefore, lower cost of credit; and (2) expand the scoring to other segments of the population, especially those outside the formal economy but who have the Ghana Card as their primary identification. Why? For example, one of the existing credit bureaus [Dun and Bradstreet] pings and uses the \u201cphotograph of the customer obtained from Electoral Commission\u2014see exhibit attached\u201d.<\/p>\n Thus, it should be possible to ping the National ID Card database to establish additional data parameters about all individuals. In other words, the National Identification Authority (NIA) will add to the existing twenty-two (22) institutions and companies that are designated as data providers [and authorised users] of the credit reporting system. In this case, NIA will become more of a data provider. The National Identification Authority (NIA) indicates that over 17 million Ghanaians have been registered for the Ghana Card as of February 2023.<\/p>\n That provides an opportunity for 17 million unique searches [and potentially more]. The 2022 Bank of Ghana Credit Report [p.11] indicates that 85% of searches made by credit report recipients on credit bureau databases resulted in a hit of some \u201conly demographic or both demographic and financial data\u201d. This was an improvement over the 2021 position of 54% due to high \u201chits\u201d recorded from mobile money loan borrowers. In other words, without the MoMo data. it would probably have averaged the three-year hit rate of 61% from 2021 to 2018. This tells me that the system, and by extension, the scores, are NOT PERFECT. In that regard, we must find ways to incorporate additional data points to improve it, and the Ghana card could help. A 2015 report by the SEEP Network noted that \u201cthere is no single unique identifier within the licensed credit bureau market\u201d and that more use of the national ID system could help.<\/p>\n Secondly, I\u2019d advise the government to partner with XDS Data Ghana and Dun and Bradstreet to introduce\/rollout an APP, WEB PORTAL and USSD, that can allow a citizen of Ghana with their name and unique National ID Card Number to quickly check their INDIVIDUAL credit SCORE and basic report for FREE. They can then pay some agreed amount through the app for a full credit report if they wish. The revenue-sharing arrangement can be sorted out between the government and the credit agencies.<\/p>\n Thanks, everyone, for engaging in this very topical policy debate.<\/p>\n Have a good week ahead!<\/p>\n REJOINDER TO \u201cDR BAWUMIAH IS RIGHT: A PERSONAL CREDIT-SCORING SYSTEM DOES NOT EXIST, AND IT IS A MUST TO DEEPEN FINANCIAL ACCESS\u201d<\/p>\n There\u2019s been an interesting debate the past week on social media on the proposal by Ghana\u2019s VP Bawumia \u201cthat Ghana early next year [2024] will be\u2026<\/p>\n \u2014 Theo Acheampong, PhD (@mytheoz) December 3, 2023<\/a><\/p><\/blockquote>\n ghanaweb.com <\/p>\n <\/p><\/div>\n
@BBSimons
] wall, I am happy to issue this rejoinder to my earlier note.<\/p>\nWay Forward<\/h2>\n
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