Industry estimates suggest that around 50% of economically active South Africans are not included in formal credit systems. Traditional lending models rely on formal employment records, credit histories and long-term banking relationships, which limit access for many individuals.
Eshmael Mpabanga, Regional Head for Southern Africa at Intellect Design Arena, said those excluded often include informal traders, small business operators, agricultural producers, gig economy workers and cross-border traders.
Mpabanga said many of these individuals are economically active but remain outside formal systems because their financial activity does not fit traditional banking models. Economic activity conducted through platforms such as mobile payments or informal channels may not be reflected in conventional credit records.
Mpabanga said the challenge is not the absence of income or business activity, but the lack of visibility within existing lending frameworks. AI is being used to address this gap by analysing alternative data sources. Mpabanga said AI-based systems assess patterns such as cash flow consistency, digital transactions and payment behaviour, providing a broader picture of financial activity.
This approach differs from traditional models that rely on historical borrowing behaviour. Mpabanga said AI allows lenders to assess individuals who may not have established credit records but demonstrate consistent economic activity.
Mpabanga said the use of AI is aimed at improving accuracy in credit assessments rather than lowering lending standards. The approach seeks to expand access to financial services while maintaining risk controls.
However, concerns remain around transparency and potential bias in AI-driven systems. Mpabanga said responsible implementation is required to ensure that new models do not reinforce existing inequalities.
Mpabanga said discussions are ongoing within the banking sector on adopting AI-based solutions. Engagement with financial institutions, including senior management, is focusing on how to integrate these systems into existing operations.
–ChannelAfrica–
