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

The report identifies a 'cusp group' comprising 23% of sub-Saharan Africa's population who earn $2-$5 per day and straddle formal and informal economies. It analyzes three distinct credit market 'faces': South Africa is 'Stuck' due to aggressive formal lending and high indebtedness; Kenya is 'Uncertain' as it transitions from traditional loans to rapid, short-term digital lending; and Ghana is 'Squeezed' by macroeconomic instability and high costs that limit formal credit access. The document argues that 'healthy' credit markets must be accessible, robust, diverse, and value-adding to prevent over-indebtedness while enabling asset accumulation. It recommends that regulators improve market monitoring, invest in digital identification, and introduce mechanisms like 'learner's licenses' for credit to protect vulnerable borrowers.

• The 'cusp group' consists of active earners living on $2-$5 per day per capita, representing approximately 23% of the sub-Saharan African population, or 227 million individuals.
• South Africa's credit market for cuspers is characterized by aggressive, highly formalized lending tied to payslips, leading to widespread over-indebtedness and a high share of impaired credit records, which reached 45% by December 2014.
• Kenya is experiencing a digital lending revolution where virtual products like M-Shwari use alternative data (airtime and M-PESA usage) to provide rapid, small-scale loans, though this risks shifting the market toward short-term consumption rather than long-term investment.
• Ghana's credit market is constrained by macroeconomic volatility, high inflation, and high interest rate spreads, leaving many cuspers dependent on group-liability microfinance or informal savings schemes.
• A 'healthy' credit market is defined by four key features: it must be accessible to credit-worthy people, robust with resilient lenders, diverse in its product offerings, and value-adding for both the consumer and the lender.
• The report suggests that regulators should implement 'learner's licenses' for credit to restrict borrowing in early years and 'Last in, last out' rules to prioritize repayment of earlier loans, thereby disciplining lenders who overextend borrowers.
• Digital infrastructure gaps, including outdated manual systems for identification and asset registries, inhibit market development and make it difficult to use assets as collateral.

APA

FSD Africa (2016). Credit on the Cusp: Strengthening credit markets for upward mobility in Africa. https://fsdafrica.org/wp-content/uploads/2025/05/CUSP-Report-KS-Final_v2_small-PDF.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/CUSP-Report-KS-Final_v2_small-PDF.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Credit on the Cusp: Strengthening credit markets for upward mobility in Africa |date=September 2016 |url=https://fsdafrica.org/wp-content/uploads/2025/05/CUSP-Report-KS-Final_v2_small-PDF.pdf |access-date=23 October 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/CUSP-Report-KS-Final_v2_small-PDF.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }