When Jasent Enterprise asked their bankers for GHS 50,000 to restock their trade, the answer was no. No audited books. No land title. Too risky. Last month, they tried again. This time, the CEO’s Ghana Card and two years of MoMo transactions got her approval in 48 hours. Jasent’s story shows Africa’s big contradiction: Small and medium enterprises create over 80% of jobs, yet they remain shut out of formal credit. That is changing – fast – as banks rethink how they lend.
Why Banks Still Say No
For decades, the problem was simple: no traceable identity, no loan. Banks lend deposits, so they fear default. Most SMEs run informal businesses and cannot offer collateral. Digital ID systems are fixing the first hurdle. Ghana’s upgraded Ghana Card now links citizens to verifiable, traceable identities and even works for payments. Nigeria’s NIN and BVN, Kenya’s Maisha Namba, and Rwanda’s national digital ID do the same. “Once we can authenticate and trace a borrower online, we can lend faster, safer, and at greater scale,” says one Accra-based credit head.
From Collateral to Cashflow
The second shift is how banks judge risk. Collateral-heavy models are giving way to cashflow-based lending. Banks now read MoMo histories, POS data, and supplier payments to score SMEs. Non-interest banking is also opening doors. By using risk-sharing and partnership models instead of interest-bearing loans, NIB eases collateral pressure for firms with irregular cash flows. Nigeria and Kenya already run Islamic finance windows that serve traders locked out of conventional credit.
Mobile Money Isn’t Enough
Digital channels cut costs and speed up approvals. But current products still miss the mark. MTN’s Qwikloan in Ghana offers quick, collateral-free loans – yet caps out at GHS 2,500. Kenya’s M-Pesa has Fuliza Biashara and Taasi Till for MSMEs, with limits up to KES 400,000. Better, but network downtime and thin business data still block bigger tickets. Add rural connectivity gaps, and it is clear: digital lending has arrived, but most SMEs still cannot fund real working capital.
The GHS 400,000 Question
Beyond microloans, SMEs need trade finance to grow. Letters of credit, invoice discounting, and supply chain finance free up cash and cut risk for importers, manufacturers, and agribusinesses. The catch: SMEs lean on risky advance payments instead of documentary credits. That can trigger regulatory trouble with central banks. Banks must guide them toward safer instruments.
De-Risking With Government
Governments now see SME finance as a national priority. Banks are tapping credit guarantee schemes, interest rate subsidies, Development Financing Institutions (DFI) co-financing, and partial risk-sharing facilities to reach youth- and women-led firms. These public-private partnerships lower the cost of lending to segments that banks once avoided.
Finance Alone Won’t Work
Credit without skills still fails. Leading banks now bundle loans with bookkeeping training, cashflow tools, market access, and digital skills. When SMEs keep better records, survival rates rise. That strengthens bank portfolios and the wider economy.
The Road Ahead
Africa’s SME finance future rests on five things: innovative credit assessment, digital delivery, public-private partnerships, data-driven risk management, and AfCFTA market integration.
Financial institutions sit at the centre, but fintechs, credit bureaus, telcos, governments, and DFIs all have roles. The World Bank, IFC, and other development partners are already backing stronger financial sector capacity. By moving from collateral to cash flow, and from paperwork to data, banks can unlock millions of entrepreneurs. If they do not, Africa’s 80% jobs engine stalls. If they do, they power the continent’s next decade of growth.
Short Profile – Oliver Tackie
The writer, Oliver Tackie, is a seasoned banker with over nineteen years of experience in Ghana’s financial and banking sector. He is currently the Sector Head, Government & Parastatals at Prudential Bank LTD. His work spans a broad range of areas, including financial institutions, investment analysis, private sector development, government and public sector, and the assessment of risk across diverse debt and equity financing structures. He is an award‑winning chartered banker and a chartered accountant, bringing a strong blend of technical expertise and strategic financial insight to his work.
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