Ghana´s Lending Fintech Ecosystem

With a population of nearly 30.42 million with a GDP per capita of USD 2,225 as of 2019, Ghana becomes one of the highest GDP per capita in West Africa. However, as of 2016, Ghana poverty rate was still high with 56, 30 percent (macro trends, 2021). 

In relation to small enterprises in Ghana, these are said to be a characteristic feature of the production landscape and have been noted to provide about 85% of manufacturing employment of Ghana. SMEs are also believed to contribute about 70% to Ghana’s GDP and account for about 92% of businesses in Ghana. However, SMEs also face many challenges in their day-to-day operations and ability to grow, since over 98% of SMEs have no access to formal financing (Lin, 2007). Moreover, when SMEs are given credit, they are often granted short-term loans and therefore they have no option but to depend on short-term and informal credits in financing their long-term needs such as acquiring new equipment (Eugene, 2014)

Ghana’s financial services industry can be categorized into three main sectors: Banking and Finance (including Non-Bank Financial Services and Forex Bureaux); Insurance; and Financial market/capital markets (The Fintech Times, 2021). Also, the banking sector is comprised of fourteen foreign-controlled and ten domestically-controlled universal banks

Ghana´s Fintech

In Ghana, the Fintech ecosystem has been growing in recent years, perhaps not to the same extent as Nigeria or South Africa, but it has had considerable growth. One of the reasons is because of the high internet penetration since almost all Ghanaian adults own a mobile phone, have basic numeracy and have the necessary ID to register for a formal account. Furthermore, most are also aware of mobile money services. This has also led to Ghana being ranked 58th in the ranking of the Fintech companies with the greatest advance (Findexable, 2020)

However, the main challenges for Fintechs in Ghana are the increasing fraudulent activities and cybercrimes and persistently high interest rates. Moreover, consumers have been victims of predatory practices as they seek high investment returns offered by MFIs; others have been using digital credit products without fully understanding their rights and obligations as consumers (Ministry of economy and industry, 2020). Also, Governance and financial issues feature prominently as barriers to investment or saving in Ghana, especially, corruption.

Lending Fintechs in Ghana

In Ghana, SMEs usually apply to micro-finance institutions, mainly because the application and approval processes are easier than with traditional banks. Most SMEs need loans to initiate business projects (capital expenditure), expand operations, invest in technology, employ more labor, increase productivity and improve competitiveness locally. In fact, lending is one of the most important Fintechs in Ghana, along with payments and equity funding

Future opportunities

With most banks in most of Africa lending mostly to larger corporate players and more established companies, loan fintechs open the doors for greater financial inclusion. Likewise, the growing adoption of technology in the country is a factor that can drive the use of these new sources of financing.