With a 3.99% (US$23.94 million) non-performing loan rate, Ecobank Ghana has so far distributed about $600 million to 3.2 million Ghanaians through its microloan product, XpressLoan, on MTN Mobile Money.
Elhanan Owureku Asare, a senior banker and digital transformation specialist of Ecobank, made this announcement at the FinTech Summit at the recently concluded Mobile World Congress Africa 2023 in Rwanda.
About four years ago, Ecobank Ghana established XpressLoan in partnership with MTN MobileMoney Limited and Jumo to offer petty traders and people affordable and collateral-free microloans at an interest rate of 6.9% recoverable in 30 days via the MTN MoMo platform.
Owureku Asare estimates that 3.2 million Ghanaians have already benefited from the program, with an average loan amount of US$34.71 per person.
However, some clients eventually started skipping payments by either not topping up their mobile wallets when a payment is due or just tossing away their respective SIM cards to avoid paying back the loan in full.
Dan Sackey, a former managing director of Ecobank Ghana, raised concern over the high percentage of unpaid loans on the XpressLoans platform last year and urged the media to inform the people about the need of repaying their microloans so that others may also benefit.
Even though the US$23.94 million in unrefunded microloans is somewhat insignificant when compared to the US$600 million disbursed thus far, it is still a very important sum of money.
Additionally, Ecobank and its partners were expected to have profited by about US$41.4 million from such loans at a 6.9% interest rate. They now only have US$17.46 million after deducting the US$23.94 million in unpaid loans.
However, Owureku Asare tells Techfocus24 that since Ecobank and its partners implemented policies to prevent NPL events, the number of non-performing loans (NPLs) on the XpressLoan platform has significantly decreased.
He noted that even though the loans are collateral-free, Ecobank and its partners can guarantee a refund rate of more than 95% thanks to the quality of the customer data that has been acquired and the science that underpins the entire business.
There is a structure in place, all the way down to the regulatory level, that prevents Xpressloans and other MoMo loan defaulters from obtaining additional financial services until they pay back their debts.
Owureku Asare, the bank's pilot for a US$5,000 MoMo Loan, stated that the success of XpressLoan in Ghana led to its replication in other markets. Currently, the bank is even piloting a US$5,000 digital loan product in Rwanda; this product will eventually be replicated across all of its 33 operational markets.
"We're turning it up even more. We think that small enterprises should be able to receive loans of up to $5,000 USD through the mobile money platform, and our colleagues in Rwanda are now testing that solution.
Later, he revealed to Techfocus24 that the solution is being directly piloted with a Fintech company called OZE and that the customer data being used is coming directly from Ecobank and not via a mobile money provider.
After the pilot, the product will be reproduced across markets, including Ghana, according to Owureku Asare, just as XpressLoan was repeated in other markets following its success in Ghana.
Value of digital transactions: US$84 billion
In the meantime, according to Owureku Asare, Ecobank reported US$84 billion in digital transactions by the end of 2022, with US$59 billion of that total occurring just in the first few months of that year.
The bank plans to record over US$120 billion in digital transaction value by the end of 2023, he said, adding that over 94% of all transactions across Ecobank's 33 markets are presently digital.
In order to ensure that its clients across all markets can move money and make payments with ease, wherever they are in the world, Owureku Asare said Ecobank invests in developing a powerful digital ecosystem.
He claims that Ecobank uses national platforms in all the nations where it conducts business to guarantee that consumers have access to instant payments as they become available as well as to systems that give settlements within predetermined turnaround times.
According to him, Ecobank is committed to using digital technology to enhance businesses and people's lives in Africa.
