mobile money

How Digital Lending Platforms Are Helping Ghanaians Access Instant Loans


David needed a quick financial rescue in 2016; the deadline for purchasing an application form that will enable him to enter the army was inching closer and with no cash on him, he downloaded the Fido App and made a loan request.

He was then asked to visit their office with his mobile phone and Identification Card (ID card) the next day to complete the process; he was both surprised and happy to receive the money instantly.

David isn’t the only one enjoying the services of digital money lending platforms springing up in Ghana. These platforms are often targeted at the young and tech savvy, offering quick and real time relief in times of financial need.

“After I received the money, I was given a month to pay but defaulted a week, so they denied me another loan until after 3 months or so when they texted back and said I can apply again,” David who didn’t want his full name revealed told Business World Ghana in an interview.

Fido Money Lending Limited, an online lending platform, has provided millions of cedis of fast and easy short-term loans- all on phone transactions- to Ghanaians since it was launched in 2014.

 It offers much flexibility as the only requirement for accessing loans is a onetime verification and a mobile money account.

Customers are encouraged to repay on time to avoid courting additional penalties which could range from paying extra on loans or being denied future loan requests.

Earlier this year (March), Fido received 500,000 Euro in funds from the German Development Finance Institution DEG, to diversify its operations to reach more consumers and startups with limited access for financial support.

 The app currently has recorded over a 100k downloads and has since introduced flexible payment terms to enable customers pay back loans in bits.

Fido isn’t the only online financial platform providing real time and simple access to loans and further disrupting the financial sector in Ghana.

In November 2017, Ghana’s leading telecommunications giant MTN in partnership with afb Ghana launched Qwikloan, a financial service that can be accessed with just a tap on a mobile phone. With this, consumers can access up to a GH₵1000 in loan through their Mobile money account.

Qwikloan sheds of the hustle with banks and collateral requirement by most financial institutions by providing instant loans to consumers in financial distress.

 It is also designed to enable entrepreneurs access start-up capital or loans to expand their businesses.

“Everyone needs to solve a need in life at a point in life, sometimes it is very difficult getting financial assistance from family and friends to solve that need. Aside from this, there are times where you may be stranded in town or while on a journey due to shortage of money. Qwikloan is here to solve those needs,” the General Manager for MTN Mobile Financial Services, Eli Hini was quoted as saying the launch of the product.

Launched barely a year ago, Qwikloan has reached over one million customer base and has offered loans in value of about GH₵600 million to its customers with a rebranding process underway.

Earlier this year, Pay Later a digital lending platform also announced it will launch its digital savings and loan services that will offer customers the opportunity to save and gain high interest in Ghana.

Pay Later would also enable customers to access small loans with lower interest rates. This was announced after the company successfully disrupted the financial sector in Nigeria. Pay Later according to reports, has recorded one million downloads on Google Playstore with over 800,000 registered users. The app is also said to have provided credit facility equivalent to $17 million so far in 2018.

With Ghana’s Financial sector struggling and lots of banks collapsing as a result of the Central Bank’s cleanup of insolvent banks, these digital apps offer the most reliable and fastest relief for business people hard hit by the crises (with cash locked up in banks) and people with genuine financial needs.

Traditional banks seem to be losing this digital revolution battle at least for now, leaving these platforms with the arduous responsibility of satisfying the mounting customers.

There’s also serious pressure on these platforms to increase their current fixed micro lending amount.

However, observers are concerned with the mode of operation of these platforms and are asking the Central bank to support and offer regulations that will ensure that others do not capitalise on this new wave to scam unsuspecting consumers.

 As more and more people find financial relief on these platforms, is there any hope for traditional banks?

Pamela Ofori- Boateng/Business World Ghana