Mobile phone-based microcredit, popularly known as MoMo loans, has become a lifeline for many Ghanaians seeking emergency funds. Yet concerns are mounting over the uniformly high interest rates charged by service providers, regardless of a borrower’s repayment history.
Currently, all borrowers, whether they consistently repay on time or frequently default, are charged the same rate. The only difference is the additional interest rate charged when the borrower exceeds the repayment period. This has sparked calls from financial analysts and consumer advocates for a more “discriminatory” or tiered interest system, where responsible borrowers enjoy lower rates while high-risk clients pay more.
Service providers have vast data on borrower behaviour, financial experts have said, arguing that It is only fair and commercially sensible to reward those who consistently repay promptly with lower interest rates. This would not only encourage a healthy borrowing culture but also reduce default rates.
Advocates argue that adopting a performance-based interest model could serve as both an incentive for borrowers to stay in good standing and a strategy for providers to manage credit risk more effectively. They believe such reforms would make MoMo loans more sustainable and equitable, especially for low-income users who rely on them as a financial safety net.
The rapid adoption of mobile money services in Ghana, with active mobile money accounts growing from 13 million in 2017 to over 24.5 million by June this year, and transaction values surpassing GHS 3 trillion in 2024 according to Bank of Ghana data, has not only transformed the payments landscape but also deepened financial inclusion.
Interest rates on MoMo loans have remained largely static, even though the average lending rate in Ghana has dropped from 30% in January to 27% and is expected to decline further following a significant drop in the Ghana Reference Rate for August to 19.67% from 23.69% in July 2025.
Industry observers believe the persistently high interest rates are a key factor driving defaults, prompting the Bank of Ghana to caution borrowers. The Central Bank recently warned that data on all mobile money loan customers is lodged in credit bureau databases, meaning defaults will negatively impact borrowers’ credit histories and could hinder future access to loans from banks and other financial institutions.
While these punitive measures can deter delinquency, experts insist that rewarding good borrowers with lower interest rates would complement enforcement and deliver better outcomes.
For now, the debate continues — but for many ordinary Ghanaians, relief from high, flat-rate interest charges cannot come soon enough.
