Credit –primarily based financial system: the present state of credit score financial system and the way in which ahead

By Dr. Richmond Akwasi ATUAHENE

A credit-based financial system is a system through which people, companies, and governments use credit score, or borrowed cash, as a major device for conducting financial transactions. In such an financial system, credit score performs a vital position in facilitating consumption, funding, and total financial development. In the developed economies like United States (216%), Germany (187%), Australia (144%), and Switzerland (108%) are the best-known credit-based economies on the planet.

These economies have well-developed credit score markets with a various vary of economic services. These economies have well-developed credit score markets with a various vary of economic services. Their credit score infrastructure, together with credit score bureaus, scoring fashions, and laws, helps widespread entry to credit score for people and companies.

These developed economies have expertise steady macro-economic surroundings with low inflation, steady trade charge, low minimal lending charges, manageable public money owed and low fiscal deficits. Their credit score infrastructure, together with credit score bureaus, scoring fashions, and laws, helps widespread entry to credit score for people and companies.

In such developed economies, enabling credit score infrastructures of subtle property addressing techniques and distinctive identification numbers like UK National Social Security Insurance Numbers, US Social Security Numbers.

These distinctive identification numbers are on centralized database that monetary establishments may very well be simply accessed. In this sort of surroundings, rates of interest on loans and different credit score amenities can be decrease than in an surroundings through which the phrase of the borrower can’t be trusted and likelihood of default is excessive. Unique property deal with system might be one of many underestimated necessities for the event of the developed economies and their monetary sectors.

One can think about what may occur if for instance the addressing techniques within the USA, UK. Euro-zone, and Japan disappeared in a single day. These developed economies may grind to a halt as a result of a lot is determined by residential or enterprise addresses. For banks and different lenders are capable of monitor and hint defaulter simply. For instance, the UK developed its postcode system within the 15 12 months interval between 1959 and 1974 (Bawumia, 2010).

Credit based- economies have well-developed credit score markets with a various vary of economic services. Their credit score infrastructure, together with credit score bureaus, scoring fashions, and laws, helps widespread entry to credit score for people and companies.

World Bank information (2023) on home credit score to non-public sector stood at 10% in 2023 one of many lowest within the Sub-Sahara Africa. World Bank information revealed on home credit score to non-public sectors for the next nations; Egypt (29.3%); Burkina Faso (31.6%); Botswana (30.1%); Cote D’ivoire (22.5%); Mauritius (68.1%) and Nigeria (13.8%).

According to Dokua-Sasu information (2023) Small and Medium -sized Enterprises performed a major position in Ghana’s financial system. In 2023, over 90% of enterprise enterprises within the nation had been SMEs. Moreover, SMEs didn’t solely kind round 80% of the full employment in Ghana but additionally accounted for 60%   the nation’s GDP.

The contribution of the personal sector to the event and sustainable development of an financial system can’t be underestimated, because the SMEs are thought-about as an engine for development. The World Bank defines small and medium enterprises as ‘any agency that has an worker measurement of as much as 300 and an annual gross sales of less than US$15 million.

In Ghana, small and medium enterprises will be outlined as any enterprise or enterprise entity that employs lower than 10 staff for small enterprise and any agency with greater than 10 staff is classed as medium and enormous in response to Ghana Statistical Service. Most of credit score markets  within the growing economies have fraughted with macroeconomic challenges, weak regulatory and authorized infrastructures, crowding out by the federal government via extreme borrowing, excessive fiscal deficits

2.0 The present state of the credit score financial system in Ghana

Difficult and harsh macroeconomic surroundings over the previous decade have affected the credit score market negatively. The financial system has been characterised by giant price range deficits, inflation, greater rates of interest, depreciation of the native forex and low financial development. . A big proportion of the vitality sector’s debt is owed to the banks.

The debt negatively affected the stability sheet of Ghana’s banks and was a major contributor to the escalation of nonperforming loans throughout the interval. High lending charges; excessive coverage charges; low ratio of personal sector credit score to GDP; rising ranges of non-performing loans; authorities extreme borrowing at treasury invoice market that had resulted in crowding out of the personal sector. Lack of availability of credit score info.

The continued lack of dependable credit score info, a system of revealing info and a database or centralized repository of debtors’ credit score histories impedes the higher move of credit score and collateral-based lending.

This has additionally raised the chance premium that banks require. In the myriads of macro- surroundings challenges, and period of non-payment of arrears to contractors, different service suppliers and vitality firms, the latest launching of a credit score scoring system is unlikely to have a significant influence on the provision of credit score supply in addition to bettering on the excessive non-performing mortgage ratio within the banking sector.

High lending charges had been a serious hinderance to non-public sector development. High lending charges in Ghana are among the many highest within the Sub-Sahara Africa thus creating vital challenges for SMEs seeking to develop and broaden to contribute to the financial improvement Weaknesses in banks and SDIs’ threat administration and in supervision have additionally been vital elements. Universal banks and SDIs’ inside controls are typically lax and threat administration practices haven’t saved tempo with the expansion of the business and the altering dangers.

Access to credit score in Ghana is hindered by restricted monetary infrastructure, excessive collateral necessities, the presence of the casual financial system, restricted credit score historical past, and high-interest charges. The lack of developed banking companies and credit score reporting techniques makes it tough for lenders to evaluate debtors’ creditworthiness.

Additionally, the necessity for vital collateral poses a barrier for people and small companies with restricted property. In Ghana, credit score efficiency has traditionally been poor attributable to a number of elements, together with the excessive stage of poverty, restricted monetary literacy, and challenges within the regulatory and authorized frameworks Ghana’s credit score surroundings had confronted basic financial deterioration of macro-economic instabilities of excessive inflation, persistent depreciation of native forex, greater coverage charges and lending charges as properly excessive fiscal deficits. Ghana’s banking sector doesn’t want a credit score scoring system proper now.

What it wants is a steady macroeconomic surroundings, insurance policies that promote enterprise development and reforms that deal with the structural weaknesses within the monetary system. One vital problem that banks and SDIs confronted had been partial or non-existent buyer or shopper dwelling and enterprise location addressing techniques; elevated operational prices. Banks and SDIs might must incur greater prices in verifying debtors’ info and conducting due diligence which may influence on their profitability. There are 9 structural points which have impeded the credit score market in Ghana over the previous decade.

29. Difficult and harsh macroeconomic surroundings of excessive inflation, persistent depreciation of native forex, greater coverage charges with related greater lending charges, and low development. A key determinant of excessive nominal rate of interest is inflation. According to Bawumia (2010) because of this central banks via -out the world have centered extra narrowly on the target of sturdy macro-economic stability. Throughout the years, Ghana have been capable of attain brief durations of macro-economic stability, punctuated by lengthy durations of macroeconomic instability over the previous 5 years pushed by fiscal excesses. The previous 5 years the nation has skilled has harsh and tough macroeconomic surroundings for each banks and SDIs on account of a basic deterioration of financial situations which have resulted within the rising in non-performing property within the monetary sector. Macro-economic instabilities have affected the flexibility of economic establishments means to soak up and handle the dangers and conduct of collectors. Stable macro-economic situations affect the effectiveness of markets, the flexibility of the monetary system to intermediate assets, and financial development. Persistent macro-economic instabilities have hampered the functioning of economic markets and such situations have additionally affected the flexibility of economic establishments to soak up and handle their dangers. Over the previous 5 years, macro-economic instabilities, market volatility had led to destabilizing creditor runs (together with deposit runs). Moreover, uncertainties about future actions in relative costs together with asset costs and trade charges may make tough to find out the medium to long run viability of the banks and SDIs. Over the previous 5 years the macroeconomic surroundings deteriorated quickly, reflecting a confluence of a meals and vitality disaster and an expansionary fiscal coverage. As fiscal deficits widened, inflation accelerated, rates of interest rose to round 30 %, buyers grew to become skittish and commenced to exit the debt market, and the trade charge started to depreciate, thereby creating situations for asset worth deterioration. Macroeconomic situations have basically modified, with a steep enhance in client worth pressures inflicting Bank of Ghana to tighten financial coverage which have resulted in greater coverage thereby impacted on greater lending charges. For banks and SDIs, the present macroeconomic surroundings comes with two main challenges. First, sudden or persistently excessive inflation offered rationale for deposit insurer to evaluate the appropriateness of their protection stage. Second, the tightened financial coverage mandatory to scale back inflation has exacerbated financial downturns, with related dangers to deposit insurers. The Ghanaian financial system was characterised by giant price range deficits, inflation, greater rates of interest, depreciation of the native forex and low financial development. Ghana for the previous three years has been categorized as a hyperinflationary financial system with three-year cumulative inflation for the nation being 128%. (IMF World Economic Outlook 2023). Ghana has been on the hyperinflation watch-list for some time. Effective 31 December 2023 the International Practices Task Force (IPTF) decided that with a 3-year cumulative inflation of 133% it’s now there.  When a rustic turns into hyperinflationary, all entities having the native forex as its purposeful forex should apply IAS 29. All reported balances and transactions are adjusted to compensate for the forex dropping its buying energy. This needs to be achieved by adjusting the values mirrored for the nation’s basic worth index at reporting date in comparison with the overall worth index at transaction date. Macroeconomic instabilities over the previous three years had impacted negatively on the monetary sector. The charge of inflation remained excessive and risky throughout a lot of the interval 2022-2024. The charge of depreciation of the native forex, the cedi, elevated over similar interval and the price range deficit scenario has continued. These unstable situations impacted negatively on the operations of all monetary establishments and the monetary depth of the financial system. The monetary sector has not yielded the meant results, primarily due to the dearth of sustained enhancements within the macroeconomic surroundings. However, weaknesses within the elementary construction of the financial system have additionally affected the result of economic sector reforms over the interval 2019 -2023.
30. One of the important thing challenges to Bank of Ghana’s financial coverage has been the lodging of the fiscal deficits by the central financial institution. The latest monetization of the federal government expenditures throughout the Covid 19 and Russia/Ukraine conflict affirmed the fiscal dominance which have resulted within the excessive inflation within the financial system. High price range deficits led to rising rates of interest on authorities debt (Treasury Bills Market) reorienting credit score away from the personal sector to the federal government. Furthermore, since time period deposits are benchmarked to treasury-bill (T-bill) charges, excessive fiscal deficits have an effect on banks’ funding prices, contribute to excessive lending charges, and erode capability to service money owed. The underlying actual financial system additionally confirmed structural weaknesses which made it weak to instability and poor agricultural sector and commerce efficiency. High fiscal deficits over previous 5 years have compounded the NPL scenario, as authorities arrears undermined the capability of contractors to service their obligations to banks and SDIs. In the context of those world shocks and the 2008 elections, public sector spending elevated considerably, elevating the fiscal deficit from 7.6% of GDP in 2006 to 14.5% of GDP in 2008 to an additional report excessive of 15.2% of GDP in 2020 however declined to 12.2% of GDP in 2021, however declined marginally to 11.8% in 2022 and provisionally declined to eight.4% in 2023. All these excessive fiscal deficits have contributed to the rising non-performing loans ratios within the banking sector over the previous decade.
31. Ghana’s unsustainable debt surroundings over the interval 2017- 2023. Ghana as a rustic has operated in an unsustainable debt surroundings which impacted negatively on their operations of the monetary companies sector.  Ghana’s financial and monetary disaster of the final three years has been essentially the most extreme disaster {that a} developed financial system has ever skilled in trendy historical past, each by way of output and employment loss in addition to length. In 2012, Ghana’s debt elevated sharply from GH₵1 billion or 48.4% of GDP to GH₵122.6 billion or 73.3% of GDP in 2016, indicating a rise of GHC 87.5 million or 24.9 proportion factors of GDP in 4 years. However, Ghana’s nominal debt has elevated from GH₵122.6 billion or 73.3% of GDP to GH₵546 billion or 88.1% of GDP in 2022 and additional elevated to GH₵610 or 72.5% of GDP regardless of a complete and painful home debt trade program in September 2023. The scenario in Ghana is a testomony to the catastrophic impact that extreme borrowing has exerted on an financial system and the disastrous penalties on the social material in addition to excessive poverty ranges. One of the core points on this up to date Ghana tragedy has been public debt. When the disaster began in 2022 with a debt-to-GDP ratio of round 100%, it was interpreted by most economists and policymakers as a public debt disaster. The results of these efforts will probably be a slowdown of the rise in debt and a lift to development and due to this fact a lower within the debt-to-GDP ratio. Ghana skilled one of the crucial difficult financial instances lately worst in historical past of Ghana.  Like many different nations world wide, the financial challenges in Ghana have been exacerbated by exterior shocks together with the Covid-19 pandemic and the conflict in Ukraine/Russia. The nation skilled anemic financial development, excessive unemployment, elevated inflation, extreme forex depreciation, lack of exterior capital market entry, deteriorating gross worldwide reserves and a looming public debt disaster. The Ministry of Finance via a debt sustainability evaluation (DSA) has declared public debt to be unsustainable. The current worth (PV) of Public and publicly assured (PPG) debt to GDP ratio as at November 2022 stood at 100.34%. The authorities has set a PV of PPG debt to GDP ratio of 55% by the tip of 2028 to realize debt sustainability. To restore debt sustainability and macroeconomic stability, the federal government requested for help from the IMF. As a part of the situation to unlock about US $3 billion of IMF prolonged credit score facility. The authorities was tasked to restructure public debt. It is apparent that the federal government intends to restructure each home and exterior debt.  Foreign debt amassed quickly with corresponding curiosity funds between 2019- 2023, because the nation bumped into financial difficulties and suspended funds on international debt on December 2022, personal and public funding collapsed, with whole funding to GDP by as a lot as 5 proportion factors. Ghana registered the biggest fiscal deficits previously decade, which reached its peak in 2020 with an unprecedented deficit of 15.2% of GDP and 12.3% in 2021 thus sharply rising the nation’s debt inventory and debt service prices, thereby creating huge budgetary difficulties, the federal government of Ghana naturally aimed toward reaching fiscal consolidation within the unique 2022 price range. In December, 2022 the federal government defaulted on the exterior debt and in addition started the home debt restructuring which has simply been accomplished. In 2022, Ghana confronted vital challenges partly as a result of Covid 19 pandemic, the Ukraine / Russia conflict and extreme authorities expenditures. These three occasions led to unsustainable debt ranges which in flip eroded the arrogance of worldwide buyers. Ghana was in debt misery and public debt is unsustainable. In response, the Government has launched into a complete debt restructuring, a major fiscal consolidation program, and the implementation of reforms to foster financial stability and resilience. The authorities’ stabilization efforts are being supported by an Extended Credit Facility (ECF) program of the IMF for about $3 billion. As the time of writing, particulars of the exterior debt restructuring had been restructured with each bilateral and euro bonds. On 3^rd October 2024, Ghana achieved over 90 per cent exterior debt restructuring of US$13 billion and it’s stated to have saved almost US$4.7 billion. The authorities initiated the trade supply and consent solicitation, which marks a crucial step in restoring Ghana’s debt sustainability and worldwide monetary relations. “The Eurobond exchange was designed with fairness in mind, reflecting agreements made with bondholder representatives on June 24, 2024. The process involved two main investor options: the PAR Option, which had no nominal haircut but a lower interest rate of 1.5%, and the DISCO Option, which carried a 37% nominal haircut but offered higher interest rates between 5% and 6%”. Ghana’s authorities has triumphantly secured over 90% approval from bondholders to restructure a staggering $13 billion in worldwide debt, marking a pivotal second in its quest for financial stability. This strategic restructuring goals to alleviate the nation’s debt burden and fulfill situations established by the International Monetary Fund (IMF) as a part of a $3 billion bailout bundle. As a results of these occasions, Ghana was lower off from the entry to worldwide capital markets which led to home debt trade which impacted negatively on all the monetary companies sector. The DDEP impacted negatively on the provision of credit score and correspondent banking companies declined, hampering financial restoration. BoG estimates that the ratio of personal sector credit score to GDP declined from 10.4 % in December 2022 to eight.3 % in December 2023. In addition to issues about debtors’ creditworthiness attributable to excessive rates of interest and the adversarial surroundings, some banks intention to chop credit score to scale back their risk-weighted property (RWAs) and enhance their CARs. IMF(July,2024) famous that the nominal development charge in personal sector credit score was properly under inflation, at 11.0% in 2023. In addition, the nonperforming loans (NPLs) ratio additional elevated to twenty.6% from 14.8% in December 2022. Credit to the personal sector as a share of GDP is comparatively low in Ghana in comparison with peer nations and has been declining over the previous decade; and the dearth of entry to finance is usually cited by the personal sector as a key constraint to funding, notably for small and medium-sized enterprises
32. Domestic Debt Exchange Program (DDEP) has impaired the stability sheets of banks and Sdis negatively. The DDEP severely affected each profitability and solvency of many banks that held giant quantities of home public debt on the onset of the DDEP. Government securities accounted for about 40 % of the banking system’s property, represented 3.4 instances regulatory capital on common, and had been a key driver of many banks’ profitability. Banks’ recorded DDEP-related impairment fees of GHS 16.3 billion (US$1.5 billion) in 2022. As a end result, the business incurred an combination lack of GHS 8 billion (US$696 million), with solely 6 banks out of 23 recording a revenue in 2022. Half of the system’s regulatory capital was worn out in December 2022 and the common CAR with out regulatory reliefs fell under the minimal of 13 %. Domestic-owned banks (state owned and personal) had been essentially the most affected attributable to their greater exposures to Ghana of Ghana (GoG) debt and decrease capital buffers. Despite the banking business’s sturdy profitability in 2023, some banks are but to fulfill a 13 % CAR and require further capital to swiftly achieve this. While monetary stability has been preserved, the provision of credit score and correspondent banking companies declined, hampering financial restoration.  Bank of Ghana estimated that the ratio of personal sector credit score to GDP declined from 10.4 % in December 2022 to eight.3 % in December 2023. In addition to issues about debtors’ creditworthiness attributable to excessive rates of interest and the adversarial macro-economic surroundings, some banks intention to chop credit score to scale back their risk-weighted property (RWAs) and enhance their CARs. Moreover, correspondent banks curtailed the companies they provide to Ghanaian banks that constrained the flexibility of native banks to have interaction in commerce finance, entry international trade, and supply associated companies to their prospects. Banks’ off-balance sheet transactions (primarily commerce finance and ensures) contracted by 33 % within the 12 months ending October 2023. The restoration of sound capital buffers of the weakest banks is a precondition to revive their means to assist the financial restoration. DDEP impacted negatively on the flexibility of banks and SDIs within the credit score market.

 

28. Government had persistently and excessively borrowed on the Short -Term finish of the money- market (Treasury Bill Market) at greater charge thereby inflicting the Crowding out of the Private Sector. The foremost drawback within the cash market had been the continued presence of the federal government in the marketplace weekly with greater market charges thus precipitated crowding out. The crowding out will not be a brand new phenomenon it has been with this nation ever because the authorities began issuing home bonds however the scenario has gotten worst within the Post DDEP period. Domestic authorities debt crowds out the personal sector by limiting the funds obtainable to borrow. This has constrained the personal sector’s means to develop the financial system, create jobs, and generate revenues that may very well be taxed. In addition, the home debt discount has additionally created a scenario often known as an inverted yield curve. An inverted yield curve exhibits that long-term Ghana Treasury bond rates of interest are lower than short-term rates of interest. When the yield curve is inverted, yields lower the farther out the maturity date is. An inverted yield occurred as short-term rates of interest on Treasury payments had been being quoted between 24% and 28.7% every year exceeds long- time period charges on Government bonds’ coupon charge of 9.1% or 8.51% every year. The time period yield curve refers back to the relationship between the short- and long-term rates of interest of fixed-income securities issued by the Ghana Government Treasury. The yield curve has inverted—that means short-term rates of interest moved greater than long-term charges—and will keep inverted via 2023 and 2024. This has signaled an imminent recession or slowdown within the Ghanaian financial system. An inverted yield curve is when shorter-term notes pay greater efficient yields than longer-term bonds. The yield curve is taken into account “normal” when longer-term bonds yield greater than shorter-term ones. In the post-DDEP period, the federal government has been borrowing on the cash market on the charge between 24% and 28.7% whereas the federal government bond coupon charge is quoted at 9.1% every year. The inverted yield curve has been seen as an indicator of a pending financial recession within the nation. When short-term rates of interest exceed long-term charges, market sentiment means that the long-term outlook is poor and that the yields provided by long-term fastened revenue will proceed to fall. The current bond market was thought-about a serious prerequisite to sustainable debt dynamics in addition to improved development prospects by the monetary sector and the broader public. However, the DDEP has not managed to decrease sign charges throughout the post-DDEP period, because the market rates of interest on short-term authorities payments have risen to traditionally excessive ranges and thus created an inverted yield curve and remained unstable
29. Government’s Dominance in financial actions had elevated vulnerabilities within the Credit Market in Ghana. The authorities’s dominance in financial exercise, in opposition to the backdrop of weaknesses in fiscal administration, additional elevated vulnerabilities within the credit score market viz- a- vis banking sector. State-owned enterprises (SOEs), MDAs and lots of small-and medium enterprises (SMEs) rely closely on enterprise from the federal government. Consequently, the federal government’s accumulation of cost arrears to contractors and different service suppliers has undermined their capability to service their financial institution loans and created NPLs throughout the business. The authorities was unable to make funds to contractors and different service suppliers, and this in flip, created NPLs throughout the banking system. IMF Country report 24/030 (01/2024) famous that authorities vitality sector arrears amounting to US$ 1.6 billion (2.3 % of GDP) and whereas non-energy sector arrears at about GHC 35 billion (5.8 % of GDP) and all vitality sector and non-energy sector arrears had all translated into the upper non-performing mortgage ratios over the previous decade. Consequently, the federal government’s accumulation of cost arrears to contractors and different service suppliers has undermined their capability to service their financial institution loans and created NPLs throughout the business. The examine had estimated that fifty % of the NPLs, reported at end-December 2023, had been straight or not directly linked to authorities arrears. The NPLs within the banking sector has deteriorated from 20.6% in December, 2023 to 24.1% in June, 2024. The authorities was unable to make funds to contractors and different service suppliers, and this in flip, created NPLs throughout the banking system
30. Weak authorized and regulatory framework for the credit score market had all contributed to the up-tick of the poor credit score efficiency within the banking sector. Challenges in debt assortment and restoration. Without correct location info, lenders wrestle to find debtors who default on their loans and different credit score amenities thus complicating debt assortment and restoration processes. There are main weaknesses within the authorized and regulatory framework for the credit score market which translated into greater non-performing mortgage ratio over the previous decade. The deficiencies are exacerbated by the weak surroundings for implementing creditor rights. Despite the institution of Borrowers and Lenders Act 2020 Act 1052; Credit Reporting Regulations (2020) LI 2394 and the collateral registry, banks reported experiencing extended delays in foreclosing on collateral. In specific, the advanced and time-consuming procedures for taking possession of collateral pledged as safety for loans lead to low debt restoration charges. Weaknesses within the authorized, regulatory and judicial techniques have all contributed to the uptick in non-performing loans within the banking sector over previous decade. Protracted authorized disputes, persistent adjournment in credit score associated by courts and weaknesses within the   Borrowers and Lenders Act 2020 (Act 1052).  The institution of the Collateral Registry on the Bank of Ghana, as mandated underneath the Borrowers and Lenders Act 2020 (Act 1052) was certainly a welcomed innovation to credit score supply in Ghana.The enactment of Act 1052 and the Collateral Registry Application Software (CRAS) has additional enhanced the next companies rendered by the Registry to its purchasers: the platform for registration of safety curiosity in each movable and immovable property ;the platform for conducting searches on property pledged as collateral. ; aiding with the belief of safety curiosity, upon a default, with out courtroom order; the platform for registering different post- registration actions, (i.e. discharges, ; amendments, switch of registration, subordination of registration, appointment of receiver or supervisor and notices of default). However, the Collateral Registry has improved registration of immovable and movable property, enhance searches on property and registration of securities however has no facilitated the speedy disposition and realization of collateral with out the approval of courts particularly within the space of authorized mortgages. With passage of Credit Reporting Act 2008 Act 726 and Credit Reporting Regulations (2020) LI 2394 with the view of lowering of uneven info within the credit score market, banks and Sdis haven’t been to scale back default possibilities of debtors and never enhance entry to credit score amenities to small and medium sized companies. Despite the institution of economic courts and the collateral registry, financial institution reported experiencing extended delays in foreclosing on collateral. In specific, the advanced and time- consuming procedures for taking possession of collateral pledged as safety for loans lead to low debt restoration charges
31. Financial inclusion (Banking the unbanked) is certainly one of main challenges that have an effect on the credit score based- financial system. The monetary system can’t develop to it potential and financial coverage can’t be efficient if nearly all of the inhabitants continues to be excluded from entry to monetary service. The significance of this to the general improvement of economic techniques in Ghana can’t be overemphasized. Multiple elements undermine monetary inclusion in Ghana and affect the prospects of elevated entry to monetary companies. An vital precondition for higher monetary inclusion is a sound and steady monetary sector that promotes development and improvement. Poverty and geography act as limitations to higher monetary inclusion in Ghana, however these limitations will be overcome by a monetary sector that adapts to the financial and geographic context, innovates to fulfill shoppers’ wants, and has a various array of inexpensive monetary companies supplied by a spread of establishments. Additionally, monetary sector infrastructure—notably funds techniques and credit score and collateral info techniques—facilitates transaction between companies, shoppers, and authorities and contributes to total financial effectivity. Sustainable monetary inclusion is additional enhanced when client authorized safety is enforced, when client rights are properly understood, and when dispute decision mechanisms are sturdy (NFIDS, 2018-2023).
32. Poor SMEs establishments and weak company governance within the SMEs house: Another vital problem to sustainable financial development in Ghana is the dearth of efficient establishments and good governance. These elements have been hindering numerous efforts and reforms of the federal government to stimulate financial development for sustainable improvement in Ghana. The prevalence of weak establishments and poor company governance in addition to poor moral requirements in most private and non-private organizations, hinder the attainment of the objectives of financial insurance policies within the nation. Poor company governance has adversely affected the standard of establishments to the extent that private and non-private establishments are used for egocentric pursuits, thereby, making regulation and legislation enforcement ineffective.

I The present institutional corruption challenges to the personal sector: Although corruption is a world scourge, Ghana seems to endure notably from it. Everyone seems to imagine that the nation has a “culture of corruption”. Over the years, Ghana has earned big sums of cash from unlawful export of gold from Galamsey which seems to have largely gone down the sinkhole created by corruption. Ghana was described as a wealthy nation floating on gold wealth “however virtually none of it flows to the folks.

Corruption has denied Ghanaians the worth of the pure mineral assets which have accrued to the nation over time. The failure of infrastructure, political and moral requirements in addition to ethical and academic requirements can simply be traced to corruption.

Collateral nonetheless reigns supreme: The actuality in Ghana is that collateral-based lending dominates the banking sector. Even for SMEs and company entities, creditworthiness as measured by money move or credit score scores doesn’t outweigh the significance of getting bodily property to safe a mortgage. This choice for collateral is a direct response to the broader financial instability that has made banks extra risk-averse. In such a context, a credit score rating is unlikely to be a decisive issue for banks in the case of approving loans (Prof Lartey.02/11/2024)

1. Furthermore, Ghana’s casual sector presents a novel problem for the implementation of a credit score scoring system. With 85 per cent of the financial system working informally, many companies and people lack the monetary information essential to generate correct credit score scores.  Most transactions within the casual sector are carried out in money and lots of members wouldn’t have financial institution accounts, not to mention credit score histories. This limits the flexibility of a credit score scoring system to incorporate a big portion of the inhabitants For the casual sector to profit from a credit score scoring system, there would must be a considerable shift towards formalizing financial actions, one thing that can’t be achieved in a single day (Prof Lartey.02/11/2024).

Preparing the bottom for a credit-based financial system – what Ghana must do.

A Model Adapted for the Credit Based Economy by Nigerian Tunde Omilola (2023). The Ghana might must undertake the Credit Based Economy Model primarily based on Omilola mannequin (2023)

3.0  With authorities dominance within the financial exercise, it may make the trail to credit-based financial system very difficult and tough as a result of the fiscal deficits all the time widened, inflation accelerated, rates of interest rise to round 30 %, buyers grew to become skittish and commenced to exit the debt market, and the trade charge begins to depreciate, thereby creating situations for asset worth deterioration, however nonetheless crucial steps are adopted and applied then credit-based financial system may very well be achieved.

The casual sector additional complicates credit score analysis, whereas the absence of complete credit score reporting techniques hampers lenders’ means to evaluate creditworthiness. Even when credit score is accessible, high-interest charges make it unaffordable for a lot of. Inflation compounds these challenges by lowering buying energy, resulting in tighter credit score situations.

With inflation at the moment at 21.4% and nonetheless pose to extend additional, the Bank of Ghana has decreased its charge to 27% every year, which has made borrowing costlier and has resulted in decreased credit score demand. Inflation-driven rate of interest volatility discourages borrowing, and inflated asset costs make it more durable for debtors to fulfill collateral necessities. Inflation additionally introduces uncertainty and threat, making lenders extra cautious and limiting entry to credit score.

According to Dokua-Sasu information (2023) Small and Medium -sized Enterprises performed a major position in Ghana’s financial system. In 2023, over 90% of enterprise enterprises within the nation had been SMEs. Moreover, SMEs didn’t solely kind round 80% of the full employment in Ghana but additionally accounted for 60%   the nation’s GDP. The contribution of the personal sector to the event and sustainable development of an financial system can’t be underestimated, because the SMEs are thought-about as an engine for development.

The World Bank defines small and medium enterprises as ‘any agency that has an worker measurement of as much as 300 and an annual gross sales of less than US$15 million. In Ghana, small and medium enterprises will be outlined as any enterprise or enterprise entity that employs lower than 10 staff for small enterprise and any agency with greater than 10 staff is classed as medium and enormous in response to Ghana Statistical Service.

1. The Ghana’s path to credit- primarily based financial system requires 9 structural and significant transformation that should be taken:

Before an financial system will be thought-about a credit-based financial system or can take into account transiting to a credit-based financial system situations similar to a steady financial system, steady forex, belief and confidence, clear credit score info, and an efficient authorized framework should be met. In Ghana, the state of the credit score financial system has been characterised by sure challenges, each by way of entry to credit score and the influence of inflation.

First, for Ghana to transit into credit score -based financial system, the Government and Bank of Ghana should work exhausting to supply steady macro-environment in steady trade charge, low inflation, low excessive deficits, and excessive development. To obtain the expansion aspirations, the primary requirement is a steady macroeconomic surroundings with low inflation, steady (market reflective) trade charges and sustainable fiscal and exterior balances. This requires that financial, commerce and financial insurance policies are properly aligned to make sure coherence and efficient coordination.

A coherent and steady macroeconomic surroundings is a pre-requisite for sustained development. It prevents the adverse influence of uncertainty and permits companies to plan their manufacturing, funding and consumption actions. The Bank of Ghana will proceed to work in the direction of bettering the operations of the international trade market to boost its liquidity.

Non-oil income will probably be accelerated via improved tax and Customs administration, together with introduction of tax on luxurious gadgets. This would guarantee a extra diversified fiscal income base away from the present dependence on crude oil and gasoline. Fiscal consolidation can even be pursued via price chopping measures that embody rationalization of overheads and recurrent expenditures and sub-national fiscal coordination.

Selected public enterprises/property will probably be privatized to optimize their operational effectivity and cut back the fiscal burden on the federal government. An applicable financial stage of stability and predictable enterprise situations are vital for credit- primarily based financial system. Stable macro-economic surroundings of low inflation, steady trade charge, manageable public debt, and sustainable stage of dangers and certainty present for favorable credit score growth and development. Stable trade charge is essential for credit score -based financial system because it offers dependable medium of trade and a unit of account lowering uncertainty for each lenders and debtors within the credit score market.

The Government of Ghana and Bank of Ghana should be dedicated to selling a robust, steady, and viable banking business to assist sturdy macro-economic development by way of steady trade charge, decrease inflation, decrease coverage charge, decrease fiscal deficits, constructive phrases of commerce and manageable public money owed that would have an effect on positively on all the monetary sector. Macroeconomic stability is the cornerstone of any profitable effort to extend personal sector improvement and financial development that allows the banking sector to enhance on solvency due to decrease inflation and steady trade charges.

Macroeconomic stability exists when key financial relationships are in stability—for instance, between home demand and output, the stability of funds, fiscal revenues and expenditure, and financial savings and funding. These relationships, nonetheless, needn’t essentially be in actual stability. Imbalances similar to fiscal and present account deficits or surpluses are completely appropriate with financial stability if they are often financed in a sustainable method.

Macroeconomic stability relies upon not solely on the macroeconomic administration of an financial system, but additionally on the construction of key markets and sectors. To improve macroeconomic stability, Ghana must assist macroeconomic coverage with structural reforms that strengthen and enhance the functioning of those markets and sectors. Prudent macroeconomic insurance policies may end up in low and steady inflation, stabilize the native forex which may contribute to enchancment on the standard of property within the banking sector.

Inflation hurts the poor by reducing development and by redistributing actual incomes and wealth to the detriment of these in society least capable of defend their financial pursuits. The authorities should be sure that macroeconomic stability is related to prudent financial and financial insurance policies, similar to low and steady ranges of inflation, decrease fiscal deficit, cheap public debt ranges, trade charge volatility (nominal or actual), and rates of interest, amongst others, all of which may very well be quantitatively assessed on the monetary sector in addition to the financial system.  The outcomes have proven that enchancment in macroeconomic situations causes enchancment in credit score high quality

Second, to make sure the safeguarding monetary system stability, the federal government should repay all excellent legacy money owed associated NPLs and resolve drawback banks or re-fence the arrears. The authorities via Ministry of Finance have agreements with contractors, different service suppliers and IPPs on month-to-month fastened cost to clear legacy arrears should be reached with contractors, service suppliers and unbiased energy producers (IPPs) to scale back the excessive non-performing mortgage ratios which have bedeviled within the banking sector over the previous decade.

Third, strengthening institutional frameworks are essential, involving the digitalizing of property addressing and the streets and roads naming techniques. Building belief and consistency is essential to profitable credit score tradition in Ghana. The significance of digitalization of those two techniques would go an extended technique to assist the event of the financial system in addition to the monetary sector.

With these improvement and enhancement of each residential and property deal with system, will allow the banks and Sdis to trace, hint and find their prospects in addition to debtors. The presence of digitalized roads and avenue naming and deal with techniques would cut back the chance premium hooked up to loans and different credit score amenities granted by banks and SDIs. Another institutional reformation the common acceptance of NIA Card as a part of credit score tradition in Ghana.

A key ingredient underpinning monetary transactions together with credit score facility in Ghana should be primarily based on belief which Fukuyama (1999) known as Social Capital (Bawumia, 2010). Since 1801, the motto of the London Stock Exchange UK is ‘My Word is My Bond’ and offers had been made with no trade of paperwork and no written pledges being given. Financial transactions are primarily based on belief and anyone breaching that is ostracized with attendant penalties.

In this sort of surroundings, default may very well be decreased and rates of interest on loans and different credit score amenities would decrease than the present surroundings through which the borrower couldn’t be trusted and the likelihood of default is excessive. It is vital to notice that in developed monetary facilities, monetary establishments place know-how to engender reliable conduct. Trust in monetary system and establishments in addition to debtors to repay its debt are very important to the functioning of the credit score markets.

Fourth, there’s a want reforms to make the monetary infrastructures operational and environment friendly together with the judicial processes for with dealing foreclosures and disposal of collateralized property. Appropriate enforcement mechanisms are wanted to make sure compliance with the International Financial Reporting Standards (IFRS), Borrowers and Lenders Act 2020 Act 1052; Credit Reporting Regulations (2020) LI 2394 to enhance monetary reporting.

Operations of the credit score registry may very well be improved by implementing lender compliance with the Credit Reporting Act 2008 (726) and strengthening oversight of information high quality. Further reforms are wanted within the legislative and institutional framework for insolvency and creditor rights to handle weaknesses within the community of registries and enhance the effectivity of economic courts. In specific, the judicial system might want to fast-track dispute resolutions and ship a message of zero tolerance with the intention to discourage a tradition of nonpayment of obligations

Fifth, empowering the personal sector via the enabling enterprise surroundings might help the credit-based financial system. The numerous authorities should endeavor to scale back the over dominance. Many tasks correctly structured will elicit personal sector participation that would cut back the burden of the federal government expenditure on the price range. For the personal sector to play its correct position nonetheless, it is necessary that rule of legislation prevails, unbiased judiciary techniques are upheld, property rights additionally upheld, and contracts are revered and ‘political witch-hunting and vindictiveness are averted.

Political democracy have actually killed all of the viable personal sector companies over the previous three a long time. Some personal sector companies collapse when there’s a change of Ghana. Uncertainty concerning the rule of legislation or the respect for property rights inform the will of native buyers Singapore offers good mannequin of personal participation.

Without the personal sector being assured of this sort of certainty within the enterprise surroundings. The relationship between authorities and the personal sector can be essential for the efficiency of the monetary sector. The scenario the place authorities has delayed to highway contractor for almost 5 years after completion impacted negatively on the flexibility of the personal sector to service it mortgage obligations thus elevated non-performing loans within the banking sector and reduces the incentives of banks to lend extra to the personal sector.

Leverage the ability of the personal sector. Economic restoration and transformative development can’t be achieved by the federal government alone. It is important to harness the dynamism of enterprise and the entrepreneurial nature of Ghanaians, from the MSMEs to the massive home and multinational firms to realize the targets of this credit- primarily based financial system.

Sixth, entry to dependable and credible credit score info is essential in credit- primarily based financial system. Localized Credit score businesses and credit score reference bureau are there to scale back constraint to credit score markets via minimization of knowledge asymmetry, thus enabling monetary establishments to make knowledgeable choices concerning the allocation of credit score. Credit score businesses expects to scale back default of debtors as they search to fulfill their cost obligations in a well timed. Credit score businesses (CRAs) play a key position in monetary markets in developed economies by serving to to scale back the informative asymmetry between lenders and borrower within the credit score market.

Credit score businesses (CRAs) are used to evaluate the chance of a borrower’s default, and its related monetary loss, within the sale monetary merchandise. Their major perform is to benchmark the probability of a debtor’s default by offering a credit standing. They are to not be confused with what are usually described as credit score reference businesses which do an identical job however for people.

Credit rankings businesses have a key position in sustaining market integrity, belief and stability, and minimizing dangers to shoppers. To obtain this, credit score rankings businesses want to contemplate how their actions and threat administration processes may have an effect on people, companies, or the broader market.

Credit rankings – which in some nations are necessary for banks and different monetary establishments – may contribute to monetary stability by appearing as a monitor of clear and relative threat‐rating and default prospects. In a rustic like Ghana, the place public disclosure of knowledge is restricted, goal and thorough credit standing has the potential to scale back info asymmetry between market members, together with debtors, lenders, and regulators.

Indeed, monetary sector regulators take a look at rankings to complement their very own threat assessments and to control numerous monetary points – e.g., capital necessities for banks eligible property for funding by institutional buyers and collective funding schemes; and many others. Credit score Agencies (CRAs) may also play a job within the coaching and capability constructing of economic establishments on credit score‐threat assessments, particularly in Ghana the place a majority of banks wouldn’t have such experience.

Nonetheless, within the absence of excessive requirements of high quality and transparency within the score course of –overreliance on rankings (as demonstrated within the years main as much as the worldwide monetary disaster) may also make markets much less clear and contribute to monetary instability. Credit scoring is a crucial part of economic sector system which offers for credit score threat evaluation and monetary intermediation however it’s not panacea for addressing all challenges and issues within the credit score market in Ghana

Seventh, within the aggressive panorama of banking and monetary companies, establishing and nurturing belief with prospects is paramount. Trust serves as the muse upon which long-term relationships are constructed and is essential for attracting and retaining prospects. In this context, efficient advertising and marketing methods play a pivotal position in enhancing belief between banks and their prospects. Transparency in all communications establishes a baseline of belief. This contains clear details about charges, companies, and any adjustments to account insurance policies. Ensuring prospects really feel totally knowledgeable at each flip reinforces their confidence in your establishment.

Tailoring companies and communication to particular person wants exhibits prospects that their distinctive monetary objectives and challenges are understood and valued. Personalized advertising and marketing, supported by information analytics, could make prospects really feel seen and appreciated, fostering a deeper belief. Innovative banking options that supply comfort, similar to cellular banking apps, on-line chat assist, and AI-driven companies, can improve buyer satisfaction and belief. Demonstrating a dedication to bettering the shopper expertise via know-how can set your financial institution aside. Building and sustaining belief within the banking sector requires a multifaceted method, with advertising and marketing methods enjoying a vital position.

By specializing in transparency, personalization, safety, neighborhood engagement, and leveraging know-how, banks can considerably improve buyer confidence. These efforts, coupled with a dedication to understanding and assembly buyer wants, pave the way in which for stronger, extra trusting relationships. Strategies for constructing belief and transparency within the monetary sector: present clear and sincere communication; educate your purchasers and prospects; keep constant and dependable interactions; leveraging on digital know-how and guarantee regulatory compliance.

Eighth, Ghana’s casual sector additional complicates credit score analysis, whereas the absence of complete credit score reporting techniques hampers lenders’ means to evaluate creditworthiness. Even when credit score is accessible, high-interest charges make it unaffordable for a lot of. There is pressing want for monetary literacy schooling. Financial literacy schooling equips people, particularly these in semi-urban and rural areas with the data and abilities wanted to navigate the complexities of the monetary sector.

It seeks to advertise participation in monetary markets and savvy use of economic devices and credit score techniques in Ghana.  Financial literacy has earned the essential place of being the cornerstone of inclusive monetary techniques that empower governments, firms, and people to make well-informed monetary choices, successfully handle their funds, and totally take part within the basic financial system.

When monetary literacy is fostered, the hole between those that have entry to monetary companies and people who wouldn’t have such entry will be bridged, thus opening up the alternatives for discount of poverty, promotion of financial development, and enchancment within the total well-being of the folks.

Financial literacy presents huge potential advantages to the monetary market panorama on the planet. For instance, those that have acquired monetary schooling are often in a greater place to make prudent monetary choices than they’d have carried out in any other case.

Individuals are normally saddled with essential life selections and would most likely must make choices about borrowing, investing, saving, shopping for insurance coverage, and retirement planning. Participation in a proper monetary system is seen as immunity in opposition to idiosyncratic dangers and sudden shocks.

Lack of entry to monetary companies is taken into account an ethical blot, a denial of elementary human rights crucial, and a key roadblock to entrepreneurship. Despite the advantages of getting sound monetary data, widespread monetary illiteracy is reported country-wide.

Ninth, monetary inclusion (banking the unbanked) is crucial part of the credit score -based financial system because the monetary system can’t develop to its potential and financial coverage can’t be efficient device if nearly all of the Ghanaian inhabitants continues to be excluded from entry to monetary companies (Bawumia, 2010). The casual sector additional complicates credit score analysis, whereas the absence of complete credit score reporting techniques hampers lenders’ means to evaluate creditworthiness.

Even when credit score is accessible, high-interest charges make it unaffordable for a lot of. Inflation compounds these challenges by lowering buying energy, resulting in tighter credit score situations. Promote nationwide cohesion and social inclusion. Ghanaians are the final word beneficiaries of extra inclusive development and due to this fact, the initiatives set out on this plan are aimed toward guaranteeing social inclusion and the strengthening of nationwide cohesion.

4.0. Conclusion

Ghana’s banking sector doesn’t want a credit score scoring system however the authorities should deal with all myriad issues that had affected credit score market by strengthen institutional and regulatory framework.

It is vital to notice the nation is saddled with so many issues similar to extreme authorities  dominance in financial actions, macro-economic instabilities, excessive monetary illiteracy, time consuming, legally advanced, expensive, and unpredictable procedures for taking collateral and implementing creditor rights, time period deposits are benchmarked to treasury-bill (T-bill) charges, excessive fiscal deficits have an effect on banks’ funding prices, contribute to excessive lending charges, and erode capability to service money owed, non-existence of home credit standing businesses, and the digitalizing of property addressing and the streets and roads naming techniques be severely addressed earlier than Ghana will be a part of the credit- primarily based economies.

The latest exodus {of professional} Ghanaians to abroad had confirmed the weaknesses in client credit score regime the place individuals who had been paid by the Accountant-General have all deserted their submit with out paying loans and credit score amenities to banks and SDIs.

Ghana is but to develop credit score markets with a various vary of economic services. The credit score infrastructure together with home credit score businesses, credit score scoring fashions and authorized and laws are too porous to assist widespread entry to credit score for people and SMEs. Credit scoring mannequin alone can’t deal with the quite a few challenges and issues within the nation’s credit score market.

Furthermore, in an inflationary surroundings like Ghana, inflation pose vital challenges, because it’s negatively influence folks buying energy, rates of interest, debt burden and overhang, uncertainty and wealth distribution.

Weaknesses in banks and SDIs’ threat administration and in supervision have additionally been vital elements.  Banks and SDIs’ inside controls are typically lax and threat administration practices haven’t saved tempo with the expansion of the business and the altering dangers.

In Ghana, credit score efficiency has traditionally been poor attributable to a number of elements, together with persistent authorities default to each vitality and non-energy sectors over the previous decade and challenges within the regulatory and authorized framework.

It’s vital to notice that transitioning to a credit-based financial system requires cautious administration and monitoring to stop extreme debt accumulation, speculative bubbles, or monetary instability. Balancing entry to credit score with prudent lending practices is essential to make sure sustainable financial development and stability.

According to World Bank report No: PAD00050 (2024) famous that   Ghana’s GDP development has been projected to stay weak in 2024 (2.8 %) due to the continued fiscal consolidation, macroeconomic uncertainty, elevated rates of interest and inflation, and monetary sector and vitality sector weaknesses.

However, there are 4 vital dangers. First, macro-economic challenges of excessive inflation and chronic depreciation of the native forex that would influence negatively on all the monetary sector.

Second low ranges of capitalization and excessive nonperforming loans (NPLs) might additional constrain the banking sector’s means to supply credit score to the true sector and assist financial restoration. Third, the belief of contingent liabilities from the vitality sector may lead to further financing wants.

Fourth, home coverage slippages as a result of political cycle, with spending pressures earlier than the elections in December 2024, threat derailing the Government’s resolve on fiscal self-discipline and macroeconomic restoration

5.0 The principal suggestions are:

1. With the deteriorated macroeconomic surroundings of excessive inflation and chronic depreciation of the native forex over the previous 4 years, reflecting a confluence of a meals and vitality disaster and an expansionary fiscal coverage. As fiscal deficits widened, inflation accelerated, rates of interest rose to round 30 %, buyers grew to become skittish and commenced to exit the debt market, and the trade charge started to depreciate, thereby creating situations for asset worth deterioration, the examine recommends that the Government of Ghana and Bank of Ghana should be dedicated to selling a robust, steady, and viable monetary companies business to assist sturdy macro-economic development by way of steady trade charge, decrease inflation, decrease coverage charge, decrease fiscal deficits, constructive phrases of commerce and manageable public money owed. Stable macro-economic surroundings of low inflation, steady trade charge, manageable public debt, and sustainable stage of dangers and certainty present for favorable monetary restoration and development within the submit DDEP interval. In addition to a steady macroeconomic surroundings, a wholesome monetary sector is required to make sure that monetary improvement advantages Ghanaian corporations and households.
2. The examine discovered that stability dangers had heightened significantly, with excessive non-performing loans (NPLs) and undercapitalized banks. The nonbanking sector additionally confronted a number of constraints, together with a shortage of long-term finance, restricted entry to monetary companies, and excessive intermediation prices. The vulnerabilities within the banking sector largely replicate pervasive state involvement and deficiencies in threat administration, supervision, and the insolvency regime.
3. Against this backdrop, the examine really helpful that by addressing stability dangers whereas sustaining the momentum on broader reforms. It urged that Government provides precedence to repaying authorities arrears together with the vitality debt, resolving drawback banks, closing regulatory gaps, strengthening supervisory capability and the insolvency regime, lowering state involvement in banks, and enhancing systemic threat evaluation
4. The authorities should strengthen the monetary infrastructures the framework for insolvency by implementing compliance with the Credit Reporting Act, Borrowers and Lenders Act and enhancing automation and coordination of all cost registries. The Chief Justice should make sure the industrial courts work on week-ends to scale back the extended delays in foreclosing on collateral. In specific, the advanced and time -consuming procedures for taking possession of collateral pledged as safety for loans lead to low debt restoration charges.
5. The authorities via Bank of Ghana should work exhausting to make sure that Ghana Card and property addressing system are coherently built-in. A key ingredient underpinning monetary transactions in any society is belief or what Fukuyama (1999) refers to social capital. Also, the significance of a system of property addresses might be one most likely one of the crucial underestimated necessities for the event of Ghana’s financial system and its monetary sector. Ghana National Identification Authority, Ministry of Finance, Bank of Ghana, and MMDAs work collectively to have an built-in techniques as a substitute the present piecemeal method. By the built-in method, it may considerably influence on the credit score market by bettering entry to credit score; improve banks and SDIs confidence, conducting due diligence on debtors will probably be simpler, make restoration debt assortment cheaper and promote accountable lending and borrowing.

Reference

Bawumia M (Dr) (2010) Monetary Policy and Financial Sector Reform in Africa- Ghana’s Experience. Oxford IBSN 978-1-60910-4I5-3

Bank of Ghana MPC experiences for December,2023 and June, 2024.

Dokua Susu, D (2023) Small and Medium -sized Enterprises performed a major position within the Ghanaian financial system.

Fukuyama, F (1999) Social Capital and Civil Society. Institute of Public Policy George Mason University

IMF Country report 24/030 (01/2024) authorities arrears attributable to contractors and different service suppliers stood at GHC35 billion or 5.8% of GDP whereas vitality sector arrears amounting to US$ 1.6 billion (2.3 % of GDP). IMF Washington

Lartey S. (Prof) (2024) Credit Scoring System in Graphic on Line on the November 2^nd Edition of 2024. Vice-President Regent University Accra Ghana

Ghana National Financial Inclusion and Development Strategy(NFIDS) 2018–2023

Omilola T. (2023) A Model Adapted for the Nigerian Credit Based Economy.

The author is a Corporate Governance/Banking Consultant

(SPECIAL PAPER TO BE PRESENTED AT THE CHARTERED OFINSTITUTE OF CREDIT MANAGEMENT (GHANA) INVESTTITURE AND PRESIDENTIAL BALL CEREMONY ON 09/11/2024)