Problem
Challenges within the digital payments economy, particularly when relying on traditional fiat currencies, pose significant barriers to credit accessibility in the developing world.
Lack of Credit History: Many individuals in the developing world lack a documented credit history, making it difficult for lenders to assess their creditworthiness and extend loans. This limits their ability to access financing for personal or business needs, restricting their economic growth opportunities
Lack of Collateral: Borrowers often struggle to provide assets or collateral as security for loans, limiting their ability to access credit.
High Risk of Fraud: Inadequate security measures and weak regulatory oversight can result in a high risk of fraudulent activities within the digital payments and lending ecosystem.
High-Risk Lending: Lenders face increased risks when lending to individuals without established credit histories or collateral, which can discourage them from providing loans. To compensate for the increased risk, lenders may charge higher interest rates or impose more stringent requirements making it difficult and expensive for borrowers to access credit
Inflation: Rapid inflation in some developing countries can erode the real value of loans and savings, affecting borrowers and lenders alike.
Limited Consumer Protections: Insufficient legal and regulatory frameworks can leave consumers vulnerable to unfair lending practices and financial exploitation. Without a formal system for resolving disputes, it can be challenging for consumers to seek redress when they fall victim to such practices
Issues with digital alternatives
Speed
Technical limitations
Complexity
Here's a file from the Bank of Ghana on the state of Credit Reporting in the year 2022.
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