Viewpoint: We Need to Talk About Credit

Tuesday, April 30, 2019

By Greta Bull

In the past five years, we have seen a lot of change in how credit markets are developing, not least because of the rapid growth in digital credit associated with mobile financial services. But how much do we actually know about digital credit? And how does it relate to other types of credit in the markets we care about? How is this new availability of credit contributing to the ability of low-income people to seize opportunities and manage risks?

Until recently, there has been very little supply-side data on the availability of formal credit in Africa, but that is starting to change. FSD Africa has been working with regulators over the past few years to start shining a light on how credit markets are evolving in the region — first in Zambia, with Tanzania and Ghana to follow. And what they have found is eye opening.

The Bank of Zambia has been systematically tracking data on its credit market since April 2017 and now updates this information quarterly. The data show that credit penetration is low in Zambia: private credit as a proportion of GDP was only 11 percent in 2017, which is well below the 22 percent average for Sub-Saharan Africa, according to the World Bank Finstats database. But in the 18 months leading up to September 2018, it grew by 69 percent in terms of value and tripled in terms of the number of loans disbursed.

Photo courtesy of

Source: CGAP (link opens in a new window)

digital finance, financial inclusion, fintech, mobile finance