With a population of over 34 million people, Ghana has a lot of people who need credit. Before you chase a lending license, though, know this: Ghana has some of the highest lending interest rates in Africa, at around 29% as of May 2024. Kenya sits at 13% and South Africa at 8.25%.
The Bank of Ghana raised rates sharply to deal with inflation and other economic pressure. Borrowing got more expensive for individuals and businesses alike.
Credit is also lopsided. Large corporations make up just 4% of businesses but receive 60% of total credit. MSMEs are 92% of businesses and contribute roughly 70% of GDP, yet they get only about 2% of available credit.
Monkey dey work, baboon dey chop.
Because formal credit is so hard to get, a large share of people borrow from family, friends, or unregulated money lenders instead.
So the demand is clearly there. But before you put on your cape, you need a license. Here are the requirements, and then you can get back to your superman duties.
An overview of Ghana’s lending legal framework
Lending in Ghana is governed mainly by the Borrowers and Lenders Act, 2020 (Act 1052), which took effect on December 29, 2020. It replaced the rules first set by the Borrowers and Lenders Act, 2008 (Act 773).
The Act defines a lender as any person who enters into a credit agreement with a borrower. So anyone who provides a credit facility, a credit transaction, or a guarantee under an agreement counts. That covers commercial banks, community banks, microfinance institutions, savings and loans companies, and individual lenders.
The Act regulates borrowing, lending, and the creation of security interests. One example: interest rates must be calculated annually. This stops lenders from quoting monthly rates that hide the real cost of a loan.
Lenders must also give borrowers a disclosure statement listing all fees and charges before any loan agreement is signed. Borrowers see the full cost before they decide.
The Bank of Ghana licenses lenders and enforces the Act, so anyone who wants to lend has to apply to the BoG.
Licenses come in four tiers. Microfinance and money lending companies sit in tiers 2 and 3. Individual money lenders and enterprises sit in tier 4, and the BoG requires every tier 4 operator to belong to an association, such as the Ghana Cooperative Susu Collectors Association (GSCU).
1. Application letter
Write to the Bank of Ghana (BoG) to say you’re applying for a money lending license. Address the letter to the Head of the Other Financial Institutions Supervision Department (OFISD).
2. Documents required
Your application needs these documents:
- Certificate of Incorporation: A certified copy from the Registrar General’s Department.
- Company’s regulations: Documents that explain how the business will be run.
- Business plan: A detailed breakdown of your services and operations, including the activities you plan to carry out, where the business will be located, and the areas you plan to serve.
- Shareholder and director details: Full names, addresses, and corporate affiliations, plus the percentage of shares each person holds.
- Personality Note Forms (PNF): Required for at least five directors, two of whom must be independent. Shareholders and key management must also complete this form.
- Tax clearance certificates: From the Ghana Revenue Authority (GRA) for shareholders, directors, and key management.
- CVs: For directors, shareholders, and key management, showing their qualifications.
- Financial projections: Financial statements, cash flow projections, and balance sheets for the first five years of operation.
- Justification: Why you want to set up the lending business and what the institution aims to achieve.
- Organizational structure: A detailed breakdown of top management roles and responsibilities.
- Source of funds: Documentary proof of the capital you’re raising and where it comes from.
- Police clearance: Certificates for all directors, shareholders, and key management.
- Proof of premises: A lease or title deed for your business premises.
- Operational manuals: Documents that set out your company’s policies and systems.
- Compliance proof: Approvals from other regulators where needed, such as the Environmental Protection Agency and SSNIT.
3. Application fees
You’ll pay:
- A processing fee of GH¢500 that you can’t get back
- A licensing fee of GH¢1,000
- An annual renewal fee of GH¢500, due by January 31 each year
4. Minimum share capital
The Bank of Ghana requires a minimum paid up capital of GH¢2,000,000 ($127,469.72) for a money lending company. The BoG must be able to verify it.
The figure used to be GH¢100,000 ($6,373.49). It was raised to make the sector more financially stable, and some companies had to merge to meet the new threshold.
5. Stages of licensing
a. Approval in Principle (AIP)
If the BoG finds your application satisfactory, it issues an “Approval in Principle” (AIP) valid for six months.
This is not a final license. It’s a conditional approval, and you must meet every specified condition within those six months.
b. Final license
Once you’ve met the conditions attached to the AIP, the BoG issues the final license to operate.
The conditions include:
- Business premises that meet the required standards, including good lighting, ventilation, and adequate size.
- Proof of operational systems, a management structure, and enough staff.
- A financial statement for the first year of operation, submitted to the BoG.
- Operational manuals and systems in place, including IT systems.
More considerations when getting a money lending license in Ghana
- The BoG will inspect your business premises to confirm they meet the required standards.
- It will also interview the company’s principal officers to assess their competence. You can ask for the interview to be held on Zoom.
- At first, the license covers only the region where your registered office is located. To expand into other regions, you need additional approval from the BoG.
- The whole process usually takes 7 to 8 months, from submitting your application to receiving the final license.
- Delays can come from document verification, background checks, and the other agencies you depend on for clearance. Changes in regulations while your application is pending can also slow things down.
- If you’re applying as a sole proprietor or enterprise, the process is slightly different:
- You must register with the Micro Credit Association of Ghana.
- You must submit bank statements showing at least GH¢50,000 in capital.
- You must get a police clearance for the sole proprietor.
- The license is only available to Ghanaian nationals when you apply as a sole proprietor.
- Foreigners can only apply through a company, not as a sole proprietor. Any foreign investment must be registered with the Ghana Investment Promotion Centre (GIPC).
Besides a license, you need these to succeed as a lender in Ghana
1. Loan management system
Several companies in Ghana sell loan management software that helps lenders run operations, manage loan portfolios, and serve customers better. Here are a few:
Digital Credit Management launched in 2017 as a digital lending platform for lenders serving the unbanked with micro and nano loans. It manages the whole loan process and also offers:
- USSD gateway
- SMS
- Mobile app
- CRM web and portfolio management
- API integrations
Jisort is a cloud platform for banking and loan management that helps financial institutions automate their services. It includes a SACCO system for client management, transaction tracking, SMS loan reminders, and financial reporting. It also supports mobile money integration, so lenders can accept payments more easily.
Lendsqr launched in 2018 and handles loan products of different sizes for different customer groups. Lenders get API integrations with CRM tools, payment gateways, and other services.
It supports several channels too, including customizable web and mobile apps, SMS, and BNPL. Oraculi handles risk assessment, and direct debit handles automated payment processing. See how Lendsqr’s features compare with other platforms.
2. ID verification tools
Non performing loans stood at 24.1% in June 2024. Weak risk assessment and economic pressure on borrowers both play a part.
You need reliable verification and risk assessment tools to protect your business. Credit bureaus give you access to customers’ credit reports. Private blacklists help too, such as Lendsqr’s Karma, which holds the largest database of bad borrowers. Here are more ways to assess risk properly.
Featured read: Alternatives to credit bureaus
3. Customer support infrastructure
How you support customers matters. In a crowded market like Ghana’s, with over 700 licensed firms, good support is also a way to stand out and win customers.
Learn how to differentiate your lending business through customer experience.
4. Debt collection mechanism
Collection is one of the hardest parts of lending. You don’t want to spend your days chasing borrowers for repayment, so you need a solid collection setup in place.
Lendsqr, for example, supports these repayment channels:
- Debit cards
- Direct debit
- Virtual accounts
- Payment links
- USSD
- Bank transfers
You can learn how to collect smarter, not harder.
5. Regulatory compliance system
The Bank of Ghana regulates lending under the Non Bank Financial Institutions Act, 2008 (Act 774) and the Borrowers and Lenders Act, 2020 (Act 1052).
Staying on the right side of the law is not optional. Your lending business depends on submitting detailed documents and meeting specific operating standards.
Help Ghana close her lending gap
Getting a lending license in Ghana takes careful planning, starting with the capital and the operational foundation. The harder question comes after the paperwork: how you lend in a market where access to credit is still a pressing problem for many people.
Responsible lending matters here, and so does the effect your services have on individuals and businesses. The tools you pick for risk assessment, debt collection, and customer service decide what your borrowers actually experience.
Formal credit is out of reach for a lot of Ghanaians. As a lender, you can either reinforce that barrier or help break it down.
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