Ecobank Ghana has to date disbursed almost US$600 million to 3.2 million Ghanaians via its microloans product, XpressLoan on MTN Mobile Money, with a 3.99% (US$23.94 million) non-performing loans rate.

Senior Banker and Digital Transformation Specialist at Ecobank, Elhanan Owuraku Asare disclosed this during the FinTech Summit at the just-ended Mobile World Congress Africa 2023 in Rwanda.

Ecobank Ghana, in collaboration with MTN MobileMoney Limited and Jumo, set up XpressLoan about four years ago to provide affordable and collateral-free microloans to petty traders and individuals at an interest rate of 6.9% refundable in 30 days via the MTN MoMo platform.

According to Owuraku Asare, the scheme has so far benefitted some 3.2 million Ghanaians with an average loan of about US$34.71 per person.

Over time, however, some customers started defaulting on repayments by either refusing to top up their mobile wallets when repayment was due or by simply throwing their respective SIM cards away just to avoid repaying the loan altogether.

Former Ecobank Ghana Managing Director, Dan Sackey, last year expressed worry over the significant levels of unrefunded loans on the XpressLoans platform and called on the media to educate the public about the need to refund their microloans so that others can also benefit.

Whereas US$23.94 million in unrefunded microloans is relatively small, compared to the US$600 million disbursed so far, it is still a very significant amount of money to have gone unrefunded.

Moreover, at a 6.9% interest rate, Ecobank and its partners were supposed to have made some US$41.4 million in profits from those loans. So, US$23.94 million unrefunded loans, leaves them with only US$17.46 million.

But Owureku Asare tells Techfocus24 that the rate of non-performing loans (NPLs) on the XpressLoan platform has seen a significant decrease in recent times because Ecobank and its partners have put measures in place to stem the NPL incidents.

He explained that while the loans are collateral-free, the quality of customers’ data collected and the science behind the whole enterprise is enough collateral for Ecobank and its partners to ensure more than a 95% refund rate.

Indeed, there is a system in place, all the way to the regulatory level, where defaulters of Xpressloans and other MoMo loans are refused other financial services until they refund those loans.

US$5,000 MoMo Loan pilot

Owuraku Asare said that based on the success story of XpressLoan in Ghana, it has been replicated in other markets, and currently, the bank is even piloting a US$5,000 digital loan product in Rwanda, which will also be replicated across all of its 33 operational markets in due course.

“We are taking the notch even higher. We believe it should be possible for small businesses to access up to US$5,000 loan on the mobile money platform, and our colleagues in Rwanda currently piloting that product.

He later told Techfocus24 that the product is being piloted directly with a Fintech called OZE and the customer data being used is directly from Ecobank and not from a mobile money operator.

Owuraku Asare said once the pilot is done the product will be replicated across markets, including Ghana, just like XpressLoan was replicated in other markets after its success in Ghana.

US$84 billion digital transaction value

Meanwhile, according to Owuraku Asare, by the close of 2022, Ecobank recorded US$84 billion worth of digital transactions, saying that US$59 billion of that amount was recorded in just the first months of that year.

He said currently, over 94% of all transactions across the 33 markets of Ecobank are digital, adding by the close of 2023, the bank expects to record over US$120 billion in digital transaction value.

Owuraku Asare said this has been made possible because Ecobank invested in building a formidable digital ecosystem to ensure that its customers across all markets are able to transfer money and make payments with ease, no matter where they are in the world.

According to him, Ecobank leverages national platforms in all the countries of its operations to ensure customers have access to instant payments, where it is available, and also systems that offer settlements within specific turnaround times.

He said Ecobank’s strategy is Africa, and the commitment is to use digital to transform businesses and individual lives.