Bawumia's credit score system a great promise for Ghana - Michael Ampadu

Michael Ampadu, a Doctoral Researcher at the University of Bristol, UK has advanced a cogent argument in support of the proposal by the flagbearer of the party, Dr. Mahamudu Bawumia, to implement a credit rating system in Ghana.

In a statement shared across his social media platforms, Michael Ampadu noted that creating an effective credit rating system will significantly improve the Ghanaian economy.

He noted that a credit rating system will further the digitalization agenda of the country and facilitate the purchase of goods and services on credit by Ghanaians.

In the educative piece, Michael Ampadu noted that a credit rating system will improve financial literacy in the country and also help people control their spending habits.

Read the full statement below

Implementing an individual credit score system in Ghana is a crucial step toward advancing the nation’s digitalization agenda. This approach, already successful in advanced countries, offers numerous benefits that can drive economic growth and financial inclusion in Ghana.

In advanced countries, credit scores provide a standardized assessment of creditworthiness, enabling banks and financial institutions to offer loans and credit products more efficiently. For Ghanaians, this would mean greater access to mortgages, car loans, and personal loans with favorable terms. Such accessibility could stimulate entrepreneurship and personal development across the nation.

Individuals with good credit scores in advanced countries can negotiate lower interest rates on loans and mortgages, reducing borrowing costs. In Ghana, a similar system could encourage financial institutions to offer competitive rates to reliable borrowers, making credit more affordable for those with good scores.

A comprehensive credit system in advanced countries identifies individuals with good financial discipline, promoting financial inclusion. In Ghana, implementing a credit score system could integrate unbanked and underbanked populations into the financial system, supporting national financial inclusion goals and reducing reliance on cash transactions.

Regular monitoring of credit scores encourages financial literacy and responsibility among consumers in advanced countries. By educating Ghanaian citizens on the importance of maintaining good credit habits, the system can promote financial discipline, savings, and investment.

An established credit score system adds an extra layer of verification and security, reducing fraud in advanced countries. In Ghana, this system could mitigate fraud in lending and financial transactions, fostering a more secure financial environment.

Implementing a credit score system aligns with digital economic initiatives by integrating modern financial technologies. It complements digital payment systems and e-commerce, fostering a robust digital financial marketplace. A digital credit scoring system simplifies financial services, making it easier to apply for and obtain credit online. This promotes the use and reliance on digital financial services.

Microfinance institutions can better evaluate and manage risks with a credit score system, encouraging them to extend credit products to small and medium-sized enterprises (SMEs) and startups, thereby fostering economic growth. A credit score system assists the government in granular economic analysis and policy formulation, leading to more targeted and efficient financial regulations and developmental programs. Additionally, a digital credit score system ensures that credit decisions are data-driven, reducing biases and improving fairness in credit distribution.

Furthermore, the efforts of the NPP government to centralize and authenticate identification through the National ID Card (Ghana Card) make achieving the credit score system in Ghana even more feasible. The Ghana Card provides a reliable and universal identification system, which is essential for tracking and assessing individual credit histories accurately.

By instituting a credit score system, Ghana stands to gain substantially from the experiences of advanced countries. This move, as proposed by H.E. Dr Mahamudu Bawumia, supports the digitalization agenda by facilitating seamless integration of financial services, improving financial inclusion, and promoting wealth creation and economic development through responsible borrowing and spending habits. Implementing a robust credit score system will require collaboration between the government, financial institutions, and technology providers to ensure its effectiveness, security, and benefits for all stakeholders in Ghana. All Ghanaians should truly accept this as a big game changer.