Executive summary

To truly grasp CedisPay's essence, start with our purpose—the driving force behind our organization's mission to empower customers and foster their financial well-being. Our purpose is crystal clear: enabling individuals to achieve financial success and making a meaningful impact in their lives. Supporting our purpose are three key components within our well-being principles: responsible lending practices, flexible payment options, and customized financial education. These principles govern our decision-making and customer interactions, ensuring transparency, fairness, and positive outcomes throughout their financial journey.

At the core of our operations lies the responsible lending model, which forms the backbone of our organization. It incorporates the scoring and eligible model, a comprehensive assessment of customers' creditworthiness and financial stability. This model considers vital factors such as income, loan duration, and assets to determine suitable loan amounts. Moreover, it rewards positive financial habits like savings, insurance coverage, automated payments, and employment stability. To facilitate due diligence on customer loan applications, we utilize our evaluation template and mobile money and bank statement analyzer.

These tools align seamlessly with our responsible lending model, serving as practical aids for evaluating customer eligibility and determining appropriate loan amounts. By understanding and embracing this purpose-driven hierarchy, we can collectively strive to empower our customers, promote financial well-being, and make a positive impact on their lives.

CedisPay Hierarchy and Responsible Lending Framework

Introduction

This document outlines the hierarchy and framework of CedisPay, highlighting the significance of our purpose, values, and principles in driving our operations. It emphasizes the importance of responsible lending practices and the development of an evaluation template that aligns with our intended responsible model. We aim to ensure fairness and avoid any bias that may penalize our customers:

1. CedisPay Purpose: At the core of everything we do is our CedisPay purpose, which serves as the guiding force for our organization. Our purpose is to empower customers and enable them to achieve financial well-being. It encapsulates our commitment to providing financial solutions that uplift individuals and support their journey towards a prosperous future
2. Well-being Principles: CedisPay's well-being principles encompass three essential components: a. Responsible Lending Practices: We prioritize responsible lending as a fundamental aspect of our operations. This involves assessing the financial capacity and stability of customers to ensure loan amounts are appropriate and manageable. We are committed to promoting transparency, fairness, and ethical lending practices in all our interactions with customers. b. Flexible Payments Options: We recognize the diverse circumstances and financial capabilities of our customers. Hence, we offer flexible payment options that accommodate their needs and enable them to repay their loans in a manner that aligns with their financial situation. c. Customized Financial Education: We believe that knowledge is power. To empower our customers further, we provide customized financial education programs that equip them with the necessary skills and insights to make informed financial decisions and achieve long-term financial well-being.
3. Responsible Lending Model: The responsible lending model serves as the foundation of our operations, ensuring that we uphold our purpose and well-being principles. From this model, we establish two crucial components: a. Scoring and Eligible Model: The scoring and eligible model is designed to assess the creditworthiness and financial stability of our customers. It considers various factors, such as available income, loan period, and pension/investment/savings assets, to determine the loan amount that can be extended to each customer. Customers who exhibit positive financial habits, such as savings, appropriate insurance coverage, automated payment behavior, and stable employment or business, are eligible for the full loan amount. b. Evaluation Template: The evaluation template is derived from the scoring and eligible model and serves as a practical tool for assessing customer eligibility and loan amounts. It must align with our responsible lending model and avoid any bias that may penalize customers. The template should accurately reflect our commitment to responsible lending and ensure fairness and transparency in our lending practices.

Build up of the CedisPay Eligible Loan Model

The CedisPay Eligible Loan Model is designed to calculate the eligible loan amount for customers based on their income and various adjustments. It ensures responsible lending practices by considering factors such as income volatility, expenses, deductions, and customer habits.

1. Customer's Income: The starting point for calculating the eligible loan amount. We apply various adjustments to the income based on factors such as income volatility, payment of rent/housing expenses, business cost of sales and operating, everyday expenses, one-off expenses, and payments to high-risk merchants
2. Deductions: Deductions are made for CedisPay Assumed Expenses, CedisPay assumed savings rate, and client-provided information on debt expenses
3. Available Income: The customer's income minus the deductions mentioned above
4. Future Residual Income: The customer's available income multiplied by the future period of the loan, representing their expected future residual income
5. Haircut: To account for potential emergencies, a further haircut is applied if the customer lacks certain habits, including savings, appropriate insurance coverage, automated payment behavior, limited employment/business stability, and credit scores below 80.

Components of CedisPay Responsible lending model

The 14 components of CedisPay responsible lending model:

1. Good bills payment behaviour
2. Good loan payment behavior
3. Stable and reliable income
4. Manageable expenses
5. Consistent savings habits
6. Manageable debt levels (DTI)
7. Automate bills and loan payments behavior
8. Stable business or employment
9. Insurance Behavior Review (optional): Documentation of insurance coverage
10. Post dated cheque should be supported by savings account
11. Where guarantor is needed the guarantor should provide post dated cheque backed by Savings account
12. Loans Above GHS10k Require Collateral of either pension asset or savings
13. Credit score above 60 The model requires a credit score of 60 or above to ensure that customers have a good credit history
14. Customer debt-to-income (DTI) ratio below 80 The model also requires a customer's DTI ratio to be below 80% to ensure that they are not overburdened with debt

Core Principles of the CedisPay Eligible Amount Model/ CedisPay Responsible lending model

The CedisPay Eligible Model serves as the foundation of our responsible lending practices, ensuring that we prioritize your financial well-being while providing you with a seamless borrowing experience. This model consists of 14 essential components that guide our decision-making process and enable us to make informed assessments. Let's take a moment to recap these components and the evidence needed for each:

1. Bills Payment Behavior Review: Consistent payment of key bills, including electricity, water, rent, and other postpaid services, reflects your financial responsibility. If such evidence is not in three months of bank statements and mobile money statements, please provide at least three months of receipts and invoices of bills payment history to demonstrate this. Having a longer history of bill payments beyond three months will positively impact your CedisPay credit score
2. Loan Payment Behavior: A positive loan repayment history, including timely payments and adherence to loan terms, increases your eligibility for future credit. If such evidence is not in three months of bank statements and mobile money statements, please provide at least three months evidence of your consistency in repaying current or previous loans. Having a longer loan payment history beyond three months will positively impact your CedisPay credit score. The Bills Payment and Loan Payments Behavior is the first core principle of CedisPay responsible lending model. This principle ensures that customers have a good track record of managing credit. The reason CedisPay asks for the most recent minimum three months credit history is based on the belief that a habit is a consistent action over a period of time, and scientific research supports the idea that a consistent action of at least 90 days (3 months) is necessary for a habit to form. By looking at the borrower's behavior over the most recent three months, CedisPay can determine whether they have developed the habit of consistently paying bills and credit on time. Research has shown that it takes an average of 66 days for a behavior to become automatic or a habit, but the time it takes to form a habit can vary widely depending on the behavior and the individual. However, it is generally accepted that a consistent action over a period of at least 90 days is necessary for a habit to form. Therefore, by looking at the borrower's credit history over the most recent three months, CedisPay can determine if they have developed the habit of consistently paying bills and credit on time. Moreover, CedisPay believes that the most recent three months are the most important in determining credit behavior because they are the most indicative of current financial habits. Financial habits can change over time, and looking at the most recent three months provides the most accurate picture of the borrower's current financial behavior. In summary, CedisPay believes that a habit is a consistent action over a period of time at least recent 3 months, and asks for the most recent minimum three months credit history to determine if a borrower has developed the habit of consistently paying bills and credit on time. Scientific research supports the idea that a consistent action of at least 90 days is necessary for a habit to form, and the most recent three months provide the most accurate picture of the borrower's current financial behavior.
3. Income Review: We evaluate the stability and reliability of your income to ensure your ability to comfortably repay loans. Please provide 3 months bank or mobile money statements with your 3 months’ pay stubs or employment letters to support this. Steady and reliable income is a critical component of CedisPay's lending model, and the company's second principle emphasizes the importance of this requirement. To ensure that borrowers have a reliable source of income for loan repayment, CedisPay follows a rigorous income verification process that involves obtaining independent documentary evidence of their stable income, such as bank or mobile money statements. CedisPay has five conditions that must be met for income verification. Firstly, the income amount should be supported by an independent documentary source such as bank statements, mobile money statements, pay slips or tax returns, to demonstrate that the borrower has a steady stream of income and is capable of repaying the loan. Secondly, the verification source should be difficult to falsify, and must come from a credible third-party source. Thirdly, the verification source should directly address the approximate or reasonable amount of the declared income. Fourthly, the income verification information/documentation should not contradict other information provided by the borrower during the underwriting process. Finally, the income should reflect the stability of the borrower's income and be normalized to remove any outliers or extreme values that are not expected to repeat into the future. CedisPay uses moving averages to ensure the stability of the borrower's income, smoothing out any large one-time transactions to provide a more accurate picture of the customer's income over time. In addition, CedisPay includes an income volatility adjustment for any average income that has a volatility greater than a set threshold. If this is the case, an appropriate income haircut is applied to adjust for the potential risks associated with a volatile income. By following these practices, CedisPay is able to maintain a robust lending model that ensures borrowers have a steady and reliable source of income for loan repayment.
4. Expenses Review: We analyze your bank and mobile money statements to understand your everyday life expenses, such as electricity bills, rent/housing expenses, water bills, airtime purchases, and fuel payments. To assist us in this assessment, please provide three months of bank statements and mobile money statements. If these expenses are not reflected in the bank statement review, we may request additional information
5. Consistent Savings Habits: We value your commitment to saving and financial discipline. Please provide evidence of your recent three months' savings contributions and a savings statement to demonstrate your consistent savings habits
6. Manageable Debt Levels (DTI): To ensure that your debt burden remains within manageable limits, your debt expenses should not exceed 25% of your income. We will assess this based on the information provided in your bank statements and loan records.
7. Automation of Bills and Loan Payments Behavior: We strongly encourage you to automate your bill and loan payments for timely and stress-free transactions. Please provide evidence of automation, such as standing orders, proof of employer direct deductions, auto deductions, or records of direct debits
8. Employment or Business Stability: Demonstrate stability through either: a.) Full-time employment with your current employer for at least three months, evidenced by your employment letter or your first payslip. B)Operating a business at a permanent location for a minimum of three months, evidenced by a business operating permit, utilities, or tax installment payments.
9. Insurance Behavior Review (not mandatory): While not mandatory, maintaining appropriate insurance coverage demonstrates responsible risk management. If applicable, please provide documentation of your insurance coverage. Having suitable insurance coverage may increase your eligible loan amount
10. Post-Dated Cheque Supported by Savings Account: If post-dated cheques are required, they should be backed by a savings account for added security. Please provide evidence of the savings account associated with the post-dated cheque.
11. Where guarantor is needed the guarantor should provide post dated cheque backed by Savings account
12. Loans Above GHS10k Require Collateral: For loans exceeding GHS10,000, collateral such as a pension plan or a post-dated cheque is required. Please provide the necessary collateral documentation
13. Credit score above 60 The model requires a credit score of 60 or above to ensure that customers have a good credit history
14. Customer debt-to-income (DTI) ratio below 80 The model also requires a customer's DTI ratio to be below 80% to ensure that they are not overburdened with debt

What evidence is required for the eligible loan model core elements (Loan requirements)

At CedisPay, responsible lending is our top priority, and we carefully assess your ability to repay when approving loans. We invite you to apply for a CedisPay loan based on your monthly income:

1. Salaried Loan (CedisLoan) or Business Loan (CedisCapital): Designed for individuals with a monthly income exceeding GHS 2,000
2. CedisCredit Fresh Start: Tailored for those with a monthly income below GHS 2,000.

To ensure a smooth application process, please review the following requirements:

1. Valid Identification: Please provide a valid identification document, such as your Ghana Card.
2. Provide 3 months of bank statements and mobile money statements to help us evaluate: a. Stable and Reliable Monthly Income. b. Assessment of Everyday or Living Expenses: We will analyze your bank and mobile money statements to understand your everyday life expenses, such as electricity bills, rent/housing expenses, water bills, airtime purchases, and fuel payments. If these expenses are not reflected in the bank statement review, we may request additional information
3. Bills Payment Behavior Assessment: We evaluate your consistency in paying key bills, such as electricity, water, rent, and other postpaid services. Please provide at least three months of bills payment history. If these bills are not reflected in the bank statement review, we may request additional information. Having a longer history of bill payments beyond three months will positively impact your CedisPay credit score
4. Loan Payment Behavior Assessment: We consider factors such as timely repayment, adherence to loan terms, and overall reliability in meeting financial commitments. Please demonstrate consistency in repaying current or previous loans. Having a longer loan payment history beyond three months will positively impact your CedisPay credit score
5. Saving Habits Assessment: We encourage and value consistent savings habits. Therefore, please provide evidence of your recent three months' savings contributions and a savings statement
6. Debt Expenses: Your debt expenses should not exceed 25% of your income. If your current debt expenses exceed this limit, your loan application may be denied
7. Automation of Bill and Loan Payments: We strongly encourage you to automate your bill and loan payments for timely and stress-free transactions. We will review your bank statements or mobile money statements to assess this behavior. If we don't find evidence of automation, we may request proof such as standing orders, proof of employer direct deductions or auto deductions, or records of direct debits. We require a minimum of three months' recent proof to ensure consistent practice of automating bill and loan payments. This evidence should reflect your past bill and loan payments, excluding your CedisPay loan auto payment required in item 12 below
8. Proof of Address: Please provide documentation verifying your address, such as the Ghana Postal GPS.
9. Employment or Business Stability: Demonstrate stability through either:
   • Full-time employment with your current employer for at least three months evidenced by your employment letter or your first payslip
   • Operating a business at a permanent location for a minimum of three months evidenced by business operating permit, utilities or tax installment payments
   To expedite the application process, ensure that most of the evidence provided covers the past three months. If bill payments, loan repayments, savings contributions, and automation of bills and loans do not have a three-month history, we may request additional information. Providing evidence spanning at least three months will minimize potential delays. To achieve a minimum credit score of 60, please meet the requirements mentioned above. However, obtaining a credit score above 70 eliminates the need for a guarantor.
10. Guarantor Requirements: If your credit score from CedisPay is below 70, you need to provide a guarantor with a good credit history. The guarantor should also provide us with both post-dated cheques to cover the loan and a three-month bank statement
11. Collateral for Loans above GHS 10,000: The loan amount will be determined based on your available income, loan period, and pension/investment/savings assets, using our eligible loan model. The maximum loan amount is GHS 20,000, and loans exceeding GHS 10,000 require collateral in the form of a pension, investment, or a post-dated cheque backed by a savings account
12. Once approved for a loan, you will be required to set up a standing order or mobile money auto-payment for loan repayment. If applicable, a pension/savings asset collateral charge document must be signed with the endorsement of the pension trustee and employer.

For convenient loan repayments, CedisPay offers two options: standing orders and mobile money auto deductions. To set up a standing order, please provide a scanned copy of the standing order form from your active bank account, including the required details. Alternatively, you can set up a mobile money auto deduction by following these steps:

1. Dial *170# on your mobile phone
2. Pay to 0549 060 777
3. Enter the loan repayment amount
4. Choose the frequency of payment (daily, weekly, or monthly).
5. Confirm payment to CEDISPAY MICRO-CREDIT ENTERPRISE.

Please note that additional evidence may be requested based on the information found in your bank or mobile money statements. For loan amounts below GHS 500, the minimum requirements are as follows:

1. Valid Ghanaian National ID: Provide a valid Ghanaian national ID along with proof of your current address, such as a Ghana Post Address
2. Mobile Money Usage: Demonstrate an average of 20 mobile money transactions per month for the past three months, with each transaction amounting to a minimum of GHS 10. Consistent and regular mobile money usage over the past three months is required
3. Mobile Money Statement: Submit the most recent three months' mobile money statement for evaluation
4. Payment History: Provide a minimum of three months' bill or loan payment history for assessment
5. Minimum Credit Score: Applicants should have a minimum credit score of 50
6. Loan Repayment: Schedule an automatic deduction of at least GHS 10 per day from your income for loan repayment

At CedisPay, we prioritize responsible lending and are committed to empowering you financially. Choose the loan option that aligns with your income and take a step towards achieving your financial goals. For further information reach us at 0595 741 614 or 0595 738 121. We hope this clarification on our requirements provides you with the necessary information. Should you have any additional questions or require assistance, please feel free to reach out to us. Our team is here to support you.
Best regards, CedisPay Team