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Africa’s credit market presents a paradox that policymakers and financial institutions can no longer afford to ignore. Banks have capital and liquidity to lend, yet millions of individuals and businesses that need credit remain excluded from formal financing. The experience of South Africa provides a striking illustration. There, consumers submitted 18.5 million credit applications in the second quarter of 2025, but 67 percent were declined.

The message is that Africa does not necessarily have a shortage of money to lend but a shortage of reliable information with which lenders can confidently determine who should receive it.

This distinction is important because the consequences extend well beyond banking. The International Finance Corporation estimates that $331 billion in yearly SME financing demand goes unmet in sub-Saharan Africa. That financing gap represents businesses unable to purchase inventory, acquire equipment, employ more workers or expand production. It represents households unable to build homes or acquire productive assets at a reasonable pace.

For too many Africans, economic progress has consequently become an exercise in saving first and building later. A family builds a house one room at a time because mortgage finance is unavailable. A small trader expands only after accumulating enough cash to purchase additional stock. A manufacturer delays acquiring equipment until retained earnings can finance it.

While this may appear prudent, it has a substantial economic cost. When productive investment depends almost entirely on accumulated savings, economic growth becomes slower than it needs to be. Businesses cannot respond quickly to opportunities, employment creation is constrained, and assets take years to build.

The problem is particularly serious because much of Africa’s economic activity takes place outside the formal financial system. Informal businesses may have customers, turnover and reliable suppliers but lack the payslips, audited accounts, extensive banking histories or conventional credit records demanded by traditional lenders.

The consequence is a damaging mismatch, as people can be economically active without being financially visible.

This is where the continent’s financial institutions need to rethink how creditworthiness is assessed. The answer is not for banks to lower their lending standards or abandon risk management. That would merely create another problem through rising defaults and weakened financial institutions. The objective should instead be to widen the evidence upon which responsible lending decisions are based.

Regular rent payments, utility bills, mobile-money transactions, school-fee savings, supplier payments and other consistent financial behaviours can reveal valuable information about an individual’s or business’s capacity to repay. The challenge is converting these scattered signals into reliable, transparent and usable credit intelligence.

This is increasingly possible through alternative-data analytics and modern credit-scoring systems. Evidence from emerging lending models suggests that expanding the pool of information available to lenders can bring previously excluded borrowers into the formal credit system without necessarily producing a corresponding explosion in bad loans.

That should encourage African banks to move beyond the traditional definition of a bankable customer.

The ideal situation is an African credit market in which credit decisions are based on demonstrated economic behaviour rather than simply on formal documentation. A trader should not be automatically considered a poor credit risk because she lacks a conventional payslip if her transaction history demonstrates consistent income and repayment behaviour. A small business should not be excluded simply because it has no lengthy audited history when alternative data can provide credible evidence of its cash flow and obligations.

Banks, however, must also confront an internal problem. Innovation can become trapped within layers of product, risk, technology, compliance and management approval. While these safeguards are necessary, excessive institutional caution can prevent financial institutions from responding quickly to an enormous market opportunity.

The way forward therefore requires collaboration among banks, fintech companies, credit bureaus, telecoms operators, payment platforms, regulators and data providers. Regulators should establish clear rules governing responsible use, privacy, consent and accuracy of alternative data, while financial institutions should invest in the technology and skills required to interpret it.

Governments also have a role in accelerating financial formalisation by improving digital identity, business registration, address systems and data-sharing frameworks. These are not merely administrative reforms but foundations for expanding access to productive credit.

Eventually, Africa’s credit challenge is an economic development challenge. Every viable business denied financing represents potentially lost jobs, production and tax revenue. Every household unable to finance productive assets loses years of economic opportunity.

The continent does not need to manufacture capital that already exists within its financial system. It needs to build the infrastructure and confidence required to deploy that capital more intelligently.

EVA Professionals has appointed Olumide Akinpelumi as its managing partner, placing a tax and global trade specialist with more than a decade of experience across professional advisory, regulatory compliance and public-sector policy work at the helm of the firm. Akinpelumi’s career has taken him across areas that are becoming increasingly important to businesses operating in Nigeria, from indirect taxation and customs to trade policy and regulatory compliance.

Before joining EVA Professionals, he served as a director in the Indirect Tax and Global Trade sub-service line of a Big Four accounting firm in Nigeria. His work covered indirect tax compliance and advisory, global trade advisory, tax structuring and planning, and issues relating to customs and tariff management. His experience also extends into public-sector policy. Akinpelumi has supported the Federal Government on tax implementation initiatives, including work connected with the implementation of the African Continental Free Trade Area (AfCFTA).

That combination of private-sector advisory and public-sector experience has given him exposure to both sides of the regulatory relationship: businesses seeking to manage their tax and trade obligations and government institutions implementing policy. For companies, the distinction is increasingly important as changes in tax, customs and trade rules can affect costs, investment decisions, supply chains and market access.

Akinpelumi has also spent more than a decade as a member of the Institute of Chartered Accountants of Nigeria (ICAN) Tax and Fiscal Policy Committee, giving him a long-running connection to discussions around Nigeria’s tax and fiscal framework. His professional work has covered several industries, including real estate, construction and property development, alongside engagements with public- and private-sector organisations on complex tax and regulatory matters.

His career has also included a strong education component. He has lectured for more than a decade through professional institutions, including ICAN and the Association of Chartered Certified Accountants (ACCA), contributing to the training and development of accounting and tax professionals. Akinpelumi holds bachelor’s and master’s degrees in accounting and is a Fellow of ICAN. He also has interests in entrepreneurship across several sectors.

At EVA Professionals, his immediate role will involve providing strategic leadership as the firm develops its advisory business and responds to the changing requirements facing companies navigating Nigeria’s tax, regulatory and trade environment. The appointment therefore brings together three strands of his career, professional advisory, public policy and professional education, as EVA Professionals seeks to strengthen its capacity in areas where regulatory changes increasingly have direct commercial consequences for businesses.