Ghana’s MSME $4.8 billion credit gap is an information problem

Ghana's small and medium-sized enterprises (MSMEs) face a staggering $4.8 billion credit gap, one of the most severe on the continent. Despite the country's advanced financial system, the lack of credit assessment is the missing link in the country's credit rails. The Bank of Ghana has recognized this problem and proposes that access to credit on fair terms should become the benchmark for measuring financial inclusion.

The regulator has acknowledged that existing transaction data can serve as a credit record, and institutions should start using this information to assess creditworthiness. Open banking reform should focus on extending credit to businesses that lack traditional collateral, rather than merely meeting technical standards. The financing gap is an information problem, as lenders cannot adequately price risk without sufficient information about small businesses.

Most institutions can build a cash-flow early-warning system using their internal transaction data, which would provide a more accurate assessment of credit risk than relying on collateral. A deliberate, funded lending tranche outside current policy, supported by guarantee or first-loss capital from a development finance institution (DFI), would provide unbiased performance data on the excluded segment.

The monitoring process should begin before extending volume, using live transaction flows to identify visible deterioration in a business's financial health. Declines should be explained with clear reason codes, turning exclusion into coaching opportunities for businesses to improve their creditworthiness. Coordination among the Bank of Ghana, National Information Communications Technology Authority (NIC), Securities and Exchange Commission (SEC), and National Payments and Regulatory Authority (NPRA) is crucial to address this issue effectively.