Ecobank Ghana has to date disbursed almost US$600 million to 3.2 million Ghanaians via its micro loans product, XpressLoan on MTN Mobile Money, with some 3.99% (US$23.94 million) non-performing loans rate.
Senior Banker and Digital Transformation Specialist at Ecobank, Elhanan Owureku Asare disclosed this during the FinTech Summit at the ongoing Mobile World Congress Africa 2023 in Rwanda.
Ecobank Ghana, in collaboration with MTN MobileMoney Limited and Jumo set up XpressLoan about four years ago to provide affordable and collateral-free microloans to petty traders and individuals at an interest rate of 6.9% refundable in 30 days via the MTN MoMo platform.
According to Owureku Asare, the scheme has so far benefitted some 3.2 million Ghanaians with average loan of about US$34.71 per person.
Over time, however, some customers started defaulting on repayments by either refusing to top up their mobile wallets when repayment is due, or by simply throwing their respective SIM cards away just to avoid repaying the loan all together.
Former Ecobank Ghana Managing Director, Dan Sackey, last year expressed worry over the significant levels of unrefunded loans on the XpressLoans platform and called on the media to educate the public about the need to refund their microloans so that others can also benefit.
Whereas US$23.94 million in unrefunded microloans is relatively small, compared to the US$600 million disbursed so far, it is still a very significant amount of money to have gone unrefunded.
Moreover, at 6.9% interest rate, Ecobank and its partners were supposed to make US$41.4 million profits from those loans. So, US$23.94 million unrefunded loans, leaves them with only US$17.46 million.
But Owureku Asare tells Techfocus24 that the rate of non-performing loans (NPLs) on the XpressLoan platform has seen a significant decrease in recent times because Ecobank and its partners have put measures in place to stem the NPL incidents.
He explained that while the loans are collateral free, the quality of customers’ data collected and the science behind the whole enterprise is enough collateral for Ecobank and its partners to ensure more than 95% refund rate.
Indeed there is a system in place, all the way to the regulatory level, where defaulters of Xpressloans and other other MoMo loans are refused other financial services until they refund those loans.
Owureku Asare said based on the success story of XpressLoan in Ghana, it has been replicated in other markets, and currently the bank is even piloting a US$5,000 digital loan product in Rwanda, which will also be replicated across its operational markets in due course.
Watch excerpts of Owureku Asare’s presentation at the MWCAfrica 2023 Fintech Summit, and the interview with Techfocus24.
