Credit on the Cusp: Strengthening credit markets for upward mobility in Africa

This executive summary by FSD Africa examines the 'cusp group' in sub-Saharan Africa—individuals earning $2-$5 per day who straddle formal and informal economies. The report analyzes credit market dynamics in South Africa, Kenya, and Ghana to provide recommendations for regulators and donors to foster healthy credit markets that enable upward mobility without leading to systemic overindebtedness.

• The 'cusp group' represents 23% of the population in sub-Saharan Africa, consisting of active earners who live on between $2 and $5 per day and occupy a space between formal and informal economic sectors.
• South Africa's credit market for the cusp group is characterized as 'Stuck,' featuring aggressive, formalized lending driven by the availability of cheap domestic funds and the use of payslips for income verification. This has led to widespread overextension, where borrowers use credit for conspicuous consumption to signal upward mobility, often resulting in salaries being almost entirely consumed by loan payments.
• Kenya's credit market is described as 'Uncertain' due to a rapid shift toward mobile-phone only lending. While traditional loans were based on relationships and collateral, new digital products like M-Shwari and offerings from Kenya Commercial Bank (KCB) have expanded access. However, there is a risk that increasing loan sizes for short-term consumption could lead to a debt crisis similar to South Africa's.
• Ghana's credit market is 'Squeezed' because capital is diverted toward risk-free treasury bills yielding 25% per year rather than consumer lending. Consequently, credit for the cusp group is scarce, expensive, and short-term, often used for survival or rescuing failing businesses rather than investment. Many borrowers rely on lightly-regulated 'susu' collection companies and cooperatives due to a preference for personal treatment and a feeling of being unwelcome in commercial banks.
• To prevent overindebtedness in open markets, the report suggests regulators implement a 'learner’s license for credit' to restrict early borrowing, cap allowable lender losses to discourage reckless high-risk pricing, and introduce 'Last in, first out' rules to prioritize repayment based on the order in which loans were issued.
• In markets where credit is constrained, the report recommends that regulators encourage diverse electronic credit offerings, invest in digital identification and asset registries (potentially using blockchain), and that donors support experimentation with peer-to-peer (P2P) lending.

APA

FSD Africa (2016). Credit on the Cusp: Strengthening credit markets for upward mobility in Africa. https://fsdafrica.org/wp-content/uploads/2025/05/Executive-Summary-Credit-on-the-Cusp_3.pdf

Chicago

FSD Africa. Credit on the Cusp: Strengthening credit markets for upward mobility in Africa. 2016. https://fsdafrica.org/wp-content/uploads/2025/05/Executive-Summary-Credit-on-the-Cusp_3.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Credit on the Cusp: Strengthening credit markets for upward mobility in Africa |date=8 September 2016 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Executive-Summary-Credit-on-the-Cusp_3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2016credit, author = {{FSD Africa}}, title = {{Credit on the Cusp: Strengthening credit markets for upward mobility in Africa}}, institution = {FSD Africa}, year = {2016}, month = sep, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Executive-Summary-Credit-on-the-Cusp_3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }