Africa’s credit system is broken, and I’m not talking theory. I’ve sat in rooms with lenders who are bleeding money. I’ve seen smart, hardworking people get locked out of loans for reasons that make no sense. And I’ve watched regulators roll out “financial inclusion strategies” with all the ceremony of a wedding but none of the lasting impact.
We’ve built a credit system that serves the elite, underwrites only the safest bets, and then acts shocked when the economy isn’t moving. Meanwhile, over a billion Africans who need credit either don’t qualify or don’t even know where to start. But that doesn’t solve the fact that someone running a logistics business can’t get ₦200,000 to buy a second bike. Or that a student has to drop out of school over KES3,000. Or that a trader with 10 years of steady income still has to “know someone at the bank” to get a chance.
The credit system is stacked against everyday people. And the main reason is this: lenders don’t have enough signal. They don’t know who they’re lending to. And because they can’t see, they’d rather not risk it.
Open banking, if implemented well, flips this script. It’s the wiring that finally allows financial institutions to understand their customers at scale. It gives lenders the confidence to do what they were designed to do: lend.
Here’s how.
People will stop taking loans in the dark
Right now, most people in Africa get their loans from cooperatives, whether you call them Osusu, Mashonisa, Chamas, SACCOs, or VICOBAs, depending on where you come from. The problem isn’t just access. It’s discovery. Most people don’t even know what’s available or whether they can qualify. Open banking changes that completely.
Think about it: if your bank transaction history is available (with your permission), then any legitimate lender plugged into the ecosystem can assess you without you lifting a finger. You don’t need to download ten different apps to compare offers. Lenders can now come to you with offers that actually make sense based on your income and behavior. Let’s say you earn R25,000 per month, spend responsibly, and don’t have existing debt. A lender could see that and offer you a R30,000 personal loan at a decent rate. No paperwork. No guesswork. No running around.
Compare that to today, where people Google “instant loan South Africa” and end up borrowing R500 at 25% interest from a shady app that threatens to call your whole contact list. Loan discovery, when powered by real-time financial data, removes the randomness. It puts structure and sense into borrowing. This is how credit becomes normal. Not something for just emergencies or backdoor deals. Just part of everyday financial life.
Lenders can finally know who they’re lending to
Nothing terrifies a lender more than lending to someone who basically doesn’t exist. I’m talking about those applicants with no reliable ID, no financial footprint, no utility bill, no workplace reference… just a phone number and their name. You don’t know their income, you don’t know their spending habits, and if the loan goes south, good luck trying to trace them. They vanish into thin air. And yet, these are the majority of people lenders have to consider every day in Africa.
Yes, we’ve had some steps in the right direction. Things like the Ghana Card, Kenya’s UPI, South Africa’s biometric bank verification, and Nigeria’s BVN. But ask anyone in lending and they’ll tell you: those IDs are only as good as the systems behind them. And those systems are often patchy, out-of-date, or not connected to any real financial behavior.
You can have a national ID and still be financially invisible. That’s where open banking actually delivers something useful. It doesn’t just give you a name and photo. It gives you a live, breathing snapshot of who someone is financially. How much they earn. How often they get paid. Who sends them money. What they spend on. Which accounts they move money between. Whether they’re constantly borrowing from ten different sources just to survive, or if they’re stable and disciplined. All of that becomes visible. All of that becomes verifiable.
And let me tell you, as someone who’s been interacting with thousands of lenders in the last decade: this changes everything. With just one API call you can go from complete blindfold to full situational awareness. You can see if someone’s bouncing around five mobile wallets to avoid paying back loans. You can see if they’re spending 40% of their income on betting. You can tell if that “salary” they claimed is really just random transfers from their cousin.
This isn’t about being intrusive. It’s about trust. If you’re going to hand someone real money, you want to be sure they’re real, too. Open banking finally makes that possible.
So no, you’re no longer lending to just “Kiki from Soweto” or “Ama from Kumasi”. You’re lending to someone whose financial life is visible, traceable, and makes sense. That’s the level of confidence lenders have been begging for.
And with that kind of signal, Africa can actually start to build a real credit system, one where people don’t get judged by where they live, how they look, or who they know, but by what they actually do with their money. That’s the kind of progress we should be aiming for.
Character won’t be a mystery anymore
In traditional banking, the “5 Cs of credit” include character, but good luck trying to measure character without data.
That’s why open banking is such a breath of fresh air. For the first time, lenders can actually see how someone behaves with money. And I don’t mean what they say on their loan application. I mean real, verified, timestamped behavior.
Do they pay their bills on time, or wait for three reminders and a threat? Do they top up DSTV every month or spend the last KES 1,000 in their wallet on betting? Do they consistently save a little something when they get paid, or do they drain their Momo wallet within 48 hours? Do they send money to their mum regularly? Are they paying off old debts bit by bit? Are they living within their means? These are the signals that show you who someone really is. And open banking puts that in plain sight.
This stuff matters way more than people think, especially in low-income markets. You’d be surprised how many financially responsible people get overlooked because they don’t have fancy payslips or big balances. But give a lender a market woman who earns GH₵800 and repays her GH₵50 microloan every week without fail, and I’ll choose her over a loud Instagram vendor in Nairobi who’s pulling in GH₵100,000 a month and ghosting all their BNPL obligations. One is reliable. The other is noise. And in lending, reliability always wins.
The beauty of open banking is that it helps lenders separate the real ones from the pretenders. Not by guessing, not by profiling, but by watching financial behavior over time. When someone’s character shows up in their transaction history, you don’t need to play detective.
It’s not just helpful, it’s liberating. Because it means lenders can finally build models that reward trustworthiness, not just income. You don’t need to be rich to get access to credit anymore, you just need to be consistent, responsible, and verifiably so.
The capacity to repay becomes obvious
Right now, many lenders are flying blind when it comes to borrower capacity. And I’m not talking educated guesses, I mean “hold your breath and pray” type of lending. You’ll see lenders asking for a payslip from three months ago, or an employment letter from a job the borrower might not even have anymore. Or worse, they just go by “gut feeling”, what the customer looks like, what they say, or what their bank balance shows that day.
But income alone doesn’t tell the whole story. And a static document doesn’t mean much when people live paycheck to paycheck. With open banking, you don’t just know what someone earns, you know what they keep. You see the full money story. You see their income coming in, their bills going out, how much is left by the 20th of the month, whether they’re constantly overdrawn or quietly putting money away. And that’s where the real insight lives.
Let’s say someone is pulling in KES 75,000 a month. Sounds good, right? But when you look closer, they’re spending KES 74,000 monthly on rent, airtime, fast food, and random impulse buys. That’s not capacity. That’s a walking default risk. Meanwhile, someone else is earning R12,000 a month. Not flashy. But month after month, they save R1,500, pay their bills early, and don’t rack up any overdrafts or gambling spikes. That’s someone who knows how to manage their money. That’s capacity.
Open banking exposes these patterns clearly and consistently. No more “Oh, but she works at a bank, so she’s probably responsible.” No more, “He drives a Benz, so he’s good for it.” That’s all nonsense. Plenty of people look financially healthy and are drowning in soft loans and bounced debit attempts. They have a financial cancer that only real financial CAT scans can reveal. Real capacity is in the behavior. And now, you get to see it. For lenders, this is huge. It means fewer defaults. It means you can stop handing out loans to people who are already overleveraged. It means you can start saying yes to people who might not look like ideal borrowers on paper, but who manage their money better than most.
And let’s be clear, this isn’t just about protecting the lender. It’s also about protecting the borrower. You can’t talk about financial inclusion and then bury people in debt they were never equipped to handle. That’s how credit becomes predatory. Open banking gives us the tools to do better. To offer credit based on truth, not guesses. And when we start doing that at scale, that’s when credit starts to actually work for both sides.
Repayment won’t be a circus anymore
Ask anyone who has ever tried collecting loans in Africa; they’ll tell you repayments are where the real chaos lives. Lending money is the easy part. Getting it back? That’s the actual work. You spend weeks underwriting a loan, setting up the disbursement, calling the customer to confirm details. Then repayment day comes, and boom! the debit fails. Why? Because the borrower quietly moved their funds to a different account the night before. Or suddenly became unreachable. Or claimed they “thought the loan started next month.”
If you’re lucky, they pick up your calls and promise to “sort it out before Friday.” If you’re not, you’re sending follow-up emails, WhatsApp nudges, and threatening SMS blasts. Your collections team becomes part debt collector, part therapist.
This nonsense costs real money. Failed debits, retried attempts, manual follow-ups, customer support hours, it all adds up. For smaller lenders, especially, this can break you.
Open banking changes this game completely. Now, borrowers can link verified bank accounts before disbursement. Not just any random account they don’t use, but the account their salary hits, the one where they actually keep money. And once that’s done, repayment becomes a non-event. Lenders can schedule collections with confidence. They know which day the money comes in. They know which account actually has activity. They’re not relying on stale mandates anymore.
And borrowers benefit too. No awkward “Sorry, I forgot” moments. No running to an agent to make manual payments. Just a system that quietly and efficiently does what it’s supposed to do. It also makes gaming the system much harder. That trick of moving money around multiple accounts to avoid debit orders? Dead on arrival. Open banking shows the full picture. You can see if someone suddenly diverted funds elsewhere or is trying to keep their repayment account dry. You see the full transaction flow across banks.
Since we all agree that collections are the heartbeat of any lending business. Fixing collections is therefore a need, not a want. You could have the best credit models in the world, but if your collections are weak, you’re toast. A strong loan collection system means you can breathe. You can reinvest, grow, and actually build a scalable credit operation.
The cost of lending will finally drop
Loans aren’t expensive because money is hard to find. Money is everywhere. There’s always someone with cash trying to make it grow. What makes loans expensive, especially in Africa, is risk. Plain and simple. Lenders aren’t out here charging 15% per month because they’re greedy (well, some of them are). They’re doing it because they’re guessing. Guessing who the borrower is. Guessing if they’ll pay back. Guessing if that payslip is real or if the borrower has five other loans running.
And when you’re lending in the dark, you build a cushion, a nicer way for what we boringly call a risk premium. A big fat cushion of interest rates, late fees, and hidden charges. Not because you want to, but because you have to. That’s how you survive the chaos. Now, with open banking, you’re not guessing anymore. You know exactly who the borrower is. You see their inflows, spending patterns, loan history, and even how often they buy airtime or send money to their loved ones. You can tell if they’re reckless or responsible. And when repayments are automated, you cut out all the drama that comes with chasing funds.
That’s what reduced risk looks like. And when risk drops, cost follows. It’s not rocket science, it’s just better data. So instead of lenders charging borrowers at 20% interest, they start getting comfortable giving them that same loan at 4%. Not because the government forced their hand, or because people were complaining on Twitter, but because the numbers finally make sense. They have confidence and clarity. That’s how credit becomes affordable. That’s how it becomes scalable. And more importantly, that’s how it actually starts working for the people it was meant to serve.
Credit will become infrastructure for growth
This is the endgame. It has always been my endgame for open banking and Lendsqr.
When credit becomes accessible, affordable, and predictable, it stops being a luxury for the elite and starts becoming infrastructure. Just like roads or electricity. It powers everything.
Schools can offer tuition loans. Landlords can offer rent payment plans. Businesses can access inventory finance without having to beg. Individuals can invest in productive tools, not just survive. And it’s not just about convenience. It’s about dignity. Because what credit really does, when it’s done right, is give people room to plan their lives. Not just react. Not just hustle their way out of emergencies. But plan. Make decisions based on logic, not luck. Build. Then grow.
That’s the real magic. Not the headlines, not the sandbox launches, not the roundtables where everyone nods but nothing changes. The magic is when everyday people: students, traders, teachers, small business owners, can say: “I know what I need. I know what I’ll get. And I know how I’ll pay it back.” That’s how we unlock scale. Not just for lenders, but for the entire economy.
And that’s why open banking matters. Not as a trend, but as what we need to finally make credit work for Africans in a way that’s sane, humane, and sustainable. If we get this right, we won’t need to hype it. The impact will speak for itself.
But here’s the part everyone likes to ignore
All of this. Every single benefit listed above only works if we don’t mess it up. Open banking won’t magically fix credit in Africa just because we launched some APIs or published a framework. It only works if the entire ecosystem, banks, fintechs, regulators, telcos, lenders, actually behaves like we’re building public infrastructure, not private kingdoms.
That means no more hoarding customer data under the guise of “competitive advantage.”No more regulators sitting on policies for 18 months while innovators suffocate. No more anti-competitive behavior from incumbents who are scared to lose control. And definitely no more silos pretending to be platforms.
Because if we take that route, if we gatekeep access, stifle collaboration, or over-regulate before the engine even starts running, we’ll end up with just another fancy initiative we killed before it had a chance to do anything meaningful.
We’ve already seen what broken credit looks like. Loan apps with 50% default rates. Borrowers running from one lender to another. Lenders pricing loans at 15% a month because they have no data to work with. People choosing between paying rent or buying meds because their salary came late, and no one will lend to them.
That’s the system we’ve been stuck with. And if we’re not careful, we’ll spend the next decade rebuilding the same mess, only this time with fancier jargon.
This is our shot to do it differently. To build something that actually works. To treat credit not as a privilege for the few, but as a foundation for growth. But it won’t happen by default. It will only happen if we choose to work together like grown-ups with a shared goal. We don’t get many chances like this. Let’s not blow it.
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