Ghana's buy-now-pay-later (BNPL) financing sector has experienced rapid growth, with various providers offering convenient payment plans for everyday items such as phones, fridges, and laptops. While BNPL has genuinely helped many households acquire essential items without the delay of traditional bank financing, concerns have been raised about its impact on household solvency. According to Joseph Benedict Mensah, an Accountant and Financial Strategist, the BNPL model has moved quickly in Ghana, particularly into homes that can least absorb a financial shock.
The BNPL model has scaled significantly in other African countries, such as Nigeria and South Africa. In Nigeria, M-KOPA has extended over ₦230 billion in credit, enabling 290,000 first-time smartphone owners. Similarly, South Africa's Payflex has built a competitive BNPL market with interest-free instalments timed to payday. Ghana is following a similar trajectory, but until recently, it lacked the regulatory framework to oversee the growing industry. The absence of friction in BNPL transactions has made it easy for households to take on multiple plans, often without realizing the cumulative impact on their finances.
The lack of visibility and oversight in Ghana's BNPL sector has raised concerns about the potential for households to accumulate unsustainable debt. When a household takes on multiple BNPL plans, each with a manageable instalment, it can lead to a situation where the household is managing one large, unplanned bill rather than several small payments. This phenomenon is known as present bias, where the benefit of a purchase is weighed more heavily than the future costs. Additionally, households tend to view BNPL payments as routine outgoings rather than debt, which can lead to a spiral of debt accumulation.
The consequences of defaulting on a BNPL plan can be severe, particularly for informal traders, gig workers, and small-business owners who rely on their devices to earn a living. In Ghana, providers like MTN can remote-lock a financed phone within 24 hours of a missed payment, which can result in lost income and further financial strain. The impact of default is often felt disproportionately by women, who typically carry household budgeting responsibility.
In response to these concerns, the Bank of Ghana introduced a Directive for Digital Credit Services Providers in 2025, which includes licensing requirements, a GH¢2 million minimum capital, and a GH¢10,000 transaction cap. While this is a step in the right direction, experts argue that more needs to be done to protect households. The current regulations require reporting data after the fact, but do not mandate checking a borrower's existing exposure before approving a new plan.
To mitigate the risks associated with BNPL, experts recommend that providers be required to check a borrower's existing exposure before approving a new plan. This would turn the per-transaction cap into a real household ceiling, preventing households from accumulating unsustainable debt. Additionally, regulators should consider mandating a cash-price-versus-deferred-price comparison and minimum notice before a device is locked.
The BNPL sector in Ghana is at a critical juncture, and it is essential that regulators, providers, and stakeholders work together to ensure that the industry grows in a way that prioritizes household solvency. While BNPL has the potential to provide convenient financing options for households, it is crucial that the sector is regulated in a way that prevents debt accumulation and protects vulnerable households.
Key points
- Buy-now-pay-later financing has grown rapidly in Ghana, but experts warn it may be a household solvency problem rather than a consumer convenience story.
- The lack of visibility and oversight in Ghana's BNPL sector has raised concerns about the potential for households to accumulate unsustainable debt.
- Experts recommend that providers be required to check a borrower's existing exposure before approving a new plan to prevent households from accumulating unsustainable debt.
