After arguing vehemently in support of Vice President Dr Mahamudu Bawumia’s 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’s critics.

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.

“There’s been an interesting debate the past week on social media on the proposal by Ghana’s VP Bawumia “that Ghana early next year [2024] will be introducing a credit scoring system for individuals…right now, our credit scoring system does not exist”.

“I’ve had the chance to listen more carefully and fully to what the VP said and consult more with some stakeholders in Ghana's finance space.

“Based on this and the commitment I made on Bright Simon’s [@BBSimons] wall, I am happy to issue this rejoinder to my earlier note,” he stated in an X post on Sunday, December 3, 2023.

“My article asserted, among others, that “the products and services offered by the Credit Bureaus are not INDIVIDUALISED CREDIT SCORING”.

“In fact, the existing licensed credit bureaus—namely XDS Data Ghana Limited and Dun and Bradstreet Credit Bureau Limited— do produce individual scores, however imperfect they may be.

“In that regard, I was wrong. Relatedly, Dr Bawumia could not have been fully correct in his assertion,” Dr Theo Acheampong added.

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.





Following Dr. Bawumia's announcement, a Vice President of Imani Africa, Bright Simons, questioned the Vice President's statement, claiming it was wrong because there is currently a credit scoring system in Ghana.

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.

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.

"Dr Bawumiah is right in the sense that an INDIVIDUALISED CREDIT SCORING does not exist in Ghana," Dr. Theo Acheampong wrote.

Referencing the Bank of Ghana’s 2022 Credit Reporting Activity Report, Dr. Theo Acheampong explained that what is in existence, by three credit bureaus "are involved in collecting credit data and providing credit referencing services to financial institutions," and not credit scoring for individuals, as announced by Dr. Bawumia.

Dr Theo Acheampong continued: "It 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:"

"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 explained.

"The 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.

"In 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," he stressed.

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 'sensible'."

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.

Read Dr Theo Acheampong’s full rejoinder below:

REJOINDER TO “DR BAWUMIAH IS RIGHT: A PERSONAL CREDIT-SCORING SYSTEM DOES NOT EXIST, AND IT IS A MUST TO DEEPEN FINANCIAL ACCESS”

There’s been an interesting debate the past week on social media on the proposal by Ghana’s VP Bawumia “that Ghana early next year [2024] will be introducing a credit scoring system for individuals…right now, our credit scoring system does not exist”.

I’ve had the chance to listen more carefully and fully to what the VP said and consult more with some stakeholders in Ghana's finance space.

Based on this and the commitment I made on Bright Simon’s [
@BBSimons
] wall, I am happy to issue this rejoinder to my earlier note.

My article asserted, among others, that “the products and services offered by the Credit Bureaus are not INDIVIDUALISED CREDIT SCORING”.

In fact, the existing licensed credit bureaus—namely XDS Data Ghana Limited and Dun and Bradstreet Credit Bureau Limited— do produce individual scores, however imperfect they may be.

In that regard, I was wrong. Relatedly, Dr Bawumiah could not have been fully correct in his assertion.

Way Forward
-------
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 “photograph of the customer obtained from Electoral Commission—see exhibit attached”.

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.

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 “only demographic or both demographic and financial data”. This was an improvement over the 2021 position of 54% due to high “hits” 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 "there is no single unique identifier within the licensed credit bureau market" and that more use of the national ID system could help.

Secondly, I’d 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.

Thanks, everyone, for engaging in this very topical policy debate.

Have a good week ahead!

REJOINDER TO “DR BAWUMIAH IS RIGHT: A PERSONAL CREDIT-SCORING SYSTEM DOES NOT EXIST, AND IT IS A MUST TO DEEPEN FINANCIAL ACCESS”

There’s been an interesting debate the past week on social media on the proposal by Ghana’s VP Bawumia “that Ghana early next year [2024] will be…

— Theo Acheampong, PhD (@mytheoz) December 3, 2023