A NEW KIND OF BORROWING
A few years ago, the average Ghanaian who needed to borrow money would have to visit a bank, queue behind the counter, and explain why he needed the cash. Now, the man on the street can get a loan on his mobile phone within minutes, and the way he thinks about borrowing money is changing. Digital borrowing is about speed, privacy, and convenience.
A market that has adopted mobile money and digital payments some years back will not have a problem adopting digital borrowing. The Bank of Ghana’s National Payment Systems Strategy for Ghana 2025 to 2029 also highlights the need to build a modern payment system that is faster, more inclusive, and more efficient.
Advocates of financial inclusion have championed a host of new banking and mobile money services promising to increase access to credit to lift living standards. But the harsh reality of making that happen is just starting to dawn. If money can be as easily borrowed or bought as airtime and sent as easily as messages, what happens when customers cannot afford it?
CONVENIENCE CAN LOWER CAUTION
The risk with digital loans isn’t always the loan itself. Sometimes, it’s how the loan could impact the borrower’s life in a short time. Conditions for a mobile phone loan are easy to overlook because they’re often hidden in small print on a tiny screen. There’s no formal signature, no line at a branch, no waiting in a physical queue, and no third party to witness the contract.
In the rush to move on with their day, consumers might not consider the charges, repayment terms, or penalties for non-payment. What should be a significant transaction has been reduced to a simple online action. That’s why regulation has become more urgent.
In 2025, the Bank of Ghana started looking into how to regulate digital credit. Earlier this year, the central bank issued guidelines for licensing Digital Credit Services Providers and directed them to operate within a prescribed regulatory framework.
INCLUSION MUST NOT BECOME EXPOSURE
Yes, digital credit benefits consumers. There are many situations where a trader needs short-term working capital, a parent might need emergency cash to buy a school uniform for a child, or a young worker might need to top up their wages before payday. In such cases, time is critical. Even if all customers are included in the financial system, it doesn’t necessarily mean they are well-served as borrowers.
Simply exposing vulnerable consumers to the financial marketplace doesn’t guarantee they will be protected properly. A poorly informed consumer may agree to a financial product without fully understanding its terms and conditions. In their desire for quick cash, consumers might accept a product that ultimately causes them trouble.
That product’s impact can worsen any difficulties they are already facing. Is digital credit good or bad for Ghana? The answer to that is of academic interest, but what’s more important to Ghanaians is whether the market will reward lenders who can accurately assess a customer’s creditworthiness, regardless of whether the customer owns a mobile phone or a bank account.
DATA IS PART OF THE STORY
Money is not the only concern. Data is also at risk. Most digital finance services gather and use personal data. The Data Protection Commission confirms that every organization that collects or uses personal data must register with the Commission under the Data Protection Act, 2012 (Act 307).
Consumer credit should be based on trust with proper consumer protection. This means consumers should know which entity will handle their personal data and why. Small credit exposures should not justify intrusive monitoring.
THREATS AND RISK
The threats and risks linked to digital lending are real. Cyberbullying has consistently been shown to affect individuals through mobile apps that provide digital loans. Recently, the Cybersecurity Authority warned about the rise of cyberbullying in the digital lending industry.
In a statement to the media, the authority pointed out that cyberbullying cases are increasing, with 130 incidents reported in 2024 alone. This is alarming. While many online lenders may be quite aggressive in their collection strategies, the fact that some debt collectors threaten and even resort to violence suggests that these lenders might be operating an abusive business model.
When financial matters involve abuse that extends beyond monetary loss to attack someone’s dignity, cause concern, or create public disturbances, it breaches basic human rights.
WHAT GHANA MUST WATCH
Ghana is moving toward a more regulated digital credit sector, which is a positive step. However, consumer literacy and awareness of digital credit still need improvement. A key request from consumers is for transparent terms and conditions, fair debt collection practices, and access to effective redress mechanisms.
Regulatory bodies must step up enforcement against those operating outside the legal framework and those abusing the digital credit sector. Digital lenders should be held accountable not only for their speed in providing credit but also for how they are treated.
THE BIGGER TEST
The phone has made finance quicker and more convenient. It has also made borrowing easier to market and sell, and perhaps more difficult to refuse. That is the real trap. Credit can be a useful and powerful tool in one’s own hands, as long as it is used wisely. It becomes a trap when credit is given too quickly, without enough time to think and calm the mind, especially when a quick decision is demanded under pressure. In those cases, the convenience of credit conceals a risk.
Ghana has made significant progress in developing a thriving digital financial services market, for which it deserves recognition. However, the key challenge now is whether digital credit will continue to benefit consumers and prevent lenders from exploiting consumers’ misfortune when they default, thereby falling into a cycle of debt.
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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
Source: www.myjoyonline.com
