In March 2018, I sat in the spacious satellite office of a private credit bureau on the third floor of an office building at the corner of a busy intersection in Lomé. I listened as a credit analyst explained to me that the biggest problem facing the finance sector in Africa was ‘information’ – or rather, a lack of information. The analyst described how his company planned to solve this problem by creating a multi-country, credit-reporting database that would collect and analyse financial data for the entire West African Economic and Monetary Union (UEMOA).Footnote 1 Since 2015, this credit bureau has worked with the Central Bank of West African States (BCEAO) to make this vision a reality. Linking together eight countries and a population of over 100 million, the UEMOA credit bureau project is the first of its kind in the world with a legal framework for cross-border data collection and sharing (World Bank 2019). Its digital platform collects information from commercial banks, credit cooperatives and microfinance agencies, as well as incorporating retail data from telecommunications and utility companies.
According to the analyst, improving the quantity and quality of information about borrowers was an urgent issue. Poor-quality or limited information meant that financial institutions did not have a clear picture of their clients’ creditworthiness. Not only was this a risk for lenders, but it also meant that borrowers experienced high interest rates and burdensome collateral requirements. This was particularly true, the analyst noted, for small-scale lenders such as credit cooperatives and microfinance agencies. Because their clients were more likely to be low-income and lack bank accounts or credit histories, these borrowers were considered ‘invisible’ to the broader credit market (Aitken Reference Aitken2017). In the view of the credit analyst, this was exactly the type of problem that credit bureaus helped to solve. Such a platform, he explained, would not only offer clear images of creditworthy borrowers, but also expand access to credit for millions of West Africans.
However, employees of local credit cooperatives in Lomé were not convinced that a private regional credit bureau would help them to evaluate their client base. Loan officers at one such cooperative insisted that the environment of lending in Togo was not suited to the predictive abilities of digital credit reporting, as the economic precarity of their borrowers meant that past actions were not reliable guarantees of future financial behaviours. Specifically, while credit bureaus rely largely on the past actions of borrowers to predict their future behaviours, cooperatives placed less value on interpreting past actions and focused instead on what could be done in the present to ensure that borrowers would successfully complete future loan payments. This required personalized methods of interviewing and evaluating clients, multiple forms of documentary and relational assurance, as well as the close monitoring of loan repayments and debt collection in order to avoid cases of delinquent loans. Based on their experiences managing credit and debt, cooperative loan officers were keenly aware that the types of risk analysis credit scoring provided would be of limited use for evaluating and making meaningful decisions about borrowers.
In this article, I reflect on the scepticism of Togolese loan officers and their views that neither the credit bureau project nor new technologies of credit scoring would help them navigate the realities of lending to predominantly low-income borrowers. I contrast this with the promises of the UEMOA credit bureau project to increase information about the creditworthiness of millions of West Africans, while also expanding access to credit for poor borrowers. I suggest that the scepticism of loan officers provides an important site to interrogate how both creditworthiness and risk are differently understood by credit bureaus and cooperative lending institutions in Togo. Both the temporal distinctions between the ways in which credit bureaus and cooperatives evaluate risk – with a focus on the past versus the future – and loan officers’ insight into the structural realities of managing debt help explain the limited role that loan officers saw for the UEMOA credit bureau project and new credit-scoring technologies that are meant to address small-scale borrowing and lending in Togo.
This article is based on ethnographic fieldwork conducted at a prominent savings and credit cooperative in Lomé, Togo, in 2017–18. In the sections that follow, I first consider the field of cooperative lending and the everyday work of loan officers responsible for evaluating borrowers and granting loans. I contrast the strategies of loan officers with those used by private credit bureaus to construct ideas about creditworthiness and risk, and I position the emergence of the UEMOA credit bureau project within broader practices of credit reporting in West Africa. To examine how proponents of private credit bureaus conceptualize the roles of both loan officers and borrowers in processes of loan approval, I analyse a public awareness campaign created to encourage Togolese to consent to financial information sharing for the newly formed credit bureau. I contrast the messaging of this campaign with ethnographic material demonstrating what is actually required of cooperative loan officers as they manage borrowers, past-due loan payments and debt collection. I conclude by reflecting on the disjuncture between how credit bureaus present the possibilities of expanding credit to poor borrowers by incorporating them into systems of credit monitoring and the work of cooperative loan officers already engaged in doing so.
Loan officers in cooperative lending
Scholars of Africa have documented the diversity of credit-granting institutions on the continent, from the types of financial assistance provided by networks of kin and religious communities, to rotating savings and credit associations, and to indigenous as well as commercial forms of money lending (Austin Reference Austin, Austin and Sugihara1993; Bähre Reference Bähre2007; Guyer Reference Guyer2004; Falola Reference Falola and Guyer1995; James Reference James2012; Shipton Reference Shipton and Guyer1995). In West Africa, savings and credit cooperatives are key sources of credit provision. In Togo, cooperatives are estimated to account for over a third of all loans granted (Périlleux Reference Périlleux2013; IMF 2019). Post-independence, cooperatives initially emerged as organizations focused on poverty alleviation and were structured around the credit union model (Ouédraogo and Gentil Reference Ouédraogo and Gentil2008).Footnote 2 In contemporary contexts, with commercial banks centred primarily in urban areas, cooperatives have filled the gap in financial services left in peri-urban and rural communities (Demetriades and Fielding Reference Demetriades and Fielding2012; Ouédraogo and Gentil Reference Ouédraogo and Gentil2008). By devising savings and loan structures for working poor clients, and by investing in methods of interviewing, savings collection and loan management, cooperatives have succeeded in carving out a significant client base.
At the centre of borrowing and lending in credit cooperatives is the loan officer – a key figure in the approval of loans and the management of debt repayment. In Lomé, loan officers spent their days meeting with clients and evaluating their requests for credit. In doing so, they served as important mediators between prospective borrowers and the cooperative institution (Kar Reference Kar2013; Siwale Reference Siwale2016). The role of the loan officer was predominantly filled by young men ranging in age from their mid-twenties to their thirties. Prior to their employment at cooperatives, Togolese loan officers typically completed several years of university classes in accounting or business management, or equivalent training in professional licensing and certification programmes. Before being hired as a loan officer, all were required to pass the twelve-month in-house training programme where they learned how to handle clients, credit and debt in the cooperative sector. As a professional office job with a regular, dependable salary and opportunities for advancement, the job of a loan officer was a desirable one in Lomé as opportunities for similar professional advancement were limited. While conditions have improved in terms of economic development and job prospects over the past decade, the impacts from the political and economic crises of the 1990s and early 2000s in Togo are still widely felt (Piot Reference Piot2010).
Loan officers’ own experiences of navigating economic conditions in the country made them keenly aware of the types of challenges faced by their predominantly working poor client base. Although their education and professional employment meant that loan officers were far less precarious than the average cooperative member, they were by no means removed from the social worlds of their clientele. Many loan officers were the first in their families to complete secondary school or attend university, and most whom I interviewed contributed financially to the households of parents, siblings or extended family.
While paying a visit to the home of a current borrower, Nico, a senior loan officer, reflected on the financial burdens that many cooperative members faced living in Lomé. Waiting for the borrower to arrive, we stood outside in the shade on one of the many wide, sandy streets that comprised the Nyékonakpoé neighbourhood. From where we stood, Nico pointed towards a long, multi-room cement building listed as the borrower’s primary address. He explained that these were individually rented rooms, marked by each room having a door to the outside and to the shared bathroom and shower area. Nico noted that these rooms were mainly occupied by single individuals who travelled to Lomé from their home villages in search of better work prospects, as was the case with this borrower. Nico was familiar with strategies of living between Lomé and a home village while looking for work, as his own parents had done the same while raising their children. After briefly moving the whole family to Lomé in the late 1980s, Nico’s parents sent him and his siblings back to their mother’s village to live with grandparents while Nico’s father navigated infrequent employment and his mother cooked for a woman with a catering business. After completing secondary school, Nico eventually returned to Lomé for an accounting training course. He now sent money regularly to his parents, who had permanently relocated to a market town near his mother’s village.
Such proximity of loan officers to these commonplace social and financial challenges made them attentive to the kinds of difficulties and instability borrowers faced in piecing together their economic livelihoods. However, while cooperative loan officers were familiar with, and even empathetic towards, the struggles that borrowers faced (Kar Reference Kar2013), they were also responsible for the management of loan portfolios and debt repayments. In order to be approved for a loan, borrowers were first required to become members of the cooperative and maintain an active savings account balance of at least one-third of the desired loan amount. For the loan application, members provided one form of photo identification and answered questions about their age, phone number, residence, marital status and dependants. Loan officers then conducted a site visit to the borrower’s home or business to confirm their physical residence. A guarantor – a friend, relative or business partner – was required in order to assume responsibility for the loan in the case of default. Additionally, borrowers were given a medical questionnaire to ascertain their health status and were required to purchase a loan-specific life insurance policy to cover any remaining loan balances in case of death. Determining creditworthiness at Togolese cooperatives was thus a complex and relational evaluative practice of which loan officers were the primary arbiters.
Successful loan officers were able to manage the risk of lending to high-risk borrowers by ensuring that clients’ claims were valid and that the numerous requirements for collateral were properly met. Establishing this network of assurances was the primary way in which loan officers navigated lending to predominantly low-income borrowers. Anthropologists studying finance workers underscore how understanding risk and risk management are key aspects of professional life (LiPuma and Lee Reference LiPuma and Lee2004). Zaloom (Reference Zaloom2004) documents the productivity of risk for futures traders by showing how aggressive risk taking has the potential to reap significant professional and economic gains. Similarly, Ho (Reference Ho2009) highlights how investment bankers exist in a culture of high risk and are rewarded for their abilities to successfully manage the pressures of operating in environments of abundant risk. For these workers, risk was coupled with the possibility of exceptional financial gain, and therefore risk taking was incentivized both personally and professionally. Unlike the high stakes risk of futures trading and investment banking, in the context of Togolese cooperatives, risk was a mundane feature of everyday life. While risk was not productive of spectacular economic gains, neither was it something loan officers were able to avoid entirely. Instead, loan officers reconciled risk as something to be managed through oversight and careful attention to client profiles and their network of guarantors. This was particularly true in terms of managing past-due and delinquent loans, as the legal processes for debt reclamation and mediation in Togo were notoriously tedious and lengthy, and they rarely resulted in full balances of debt paid to lenders.
By evaluating borrowers’ current income-generating activities and adherence to institutional requirements as assurance of future financial actions, loan officers’ methods contrasted with the credit-scoring algorithms that privileged past financial behaviour as the primary metric for identifying and managing risk. Loan officers such as Nico were sceptical about the value of credit-scoring technologies, and I argue that their concerns point towards the limited utility of credit scoring for the field of small-scale finance more broadly, as well as the implications for the clients served by it. With the promise of a regional credit bureau and new credit-reporting technologies, how do cooperative loan officers make sense of these impending transformations? Will a private credit bureau address the types of everyday challenges faced by small-scale lenders in Lomé? Finally, how may credit-reporting technologies have an impact on accessible pathways to savings and loans used by millions of West African borrowers?
Credit monitoring and reporting in Africa
To be creditworthy is to be viewed by lenders as a reliable investment, as someone trustworthy and likely to repay debts on time and in full. By collecting and analysing large quantities of personal and financial data, credit bureaus purport to be able to accurately evaluate an individual’s creditworthiness and predict their future financial behaviour (Marron Reference Marron2007). Credit bureaus are premised on the idea of reducing risk and limiting ‘information asymmetries’ – the difference between what lenders know about borrowers and what borrowers know about themselves (Leyshon and Thrift Reference Leyshon and Thrift1999). Contemporary credit bureaus solicit data from banks and credit card companies, as well as from a wide range of industries and retail including insurance, telecommunications, energy utilities, and others. Increasingly, consumer credit reporting takes an ‘all data is credit data’ approach to sourcing data from a widening array of sites (Aitken Reference Aitken2017).
Techniques for packaging risk so that it can be sold or profitably redistributed make for lucrative business (see Appel Reference Appel2019). The most common technique used by credit bureaus to transform raw data into representations of risk and creditworthiness is the personal credit score. Specialized software is used to sort and code different elements of consumer data, such as income, credit histories and payment transactions, in order to ultimately produce a credit ‘score’ for each individual (Poon Reference Poon2007). Credit scoring encompasses a variety of statistical techniques used to predict the likelihood that borrowers will default on a loan, or the ‘riskiness’ of potential borrowers (Hand and Henley Reference Hand and Henley1997; Singh Reference Singh2015). Typically represented as an actual numerical score, with higher scores more positive than lower scores, some bureaus also use a letter grade system with A+ as the highest score.Footnote 3 Credit scores are powerful tools used to make claims about the risk and reliability of individual consumers, as well as decisions about who should have access to credit and why.
Technologies of credit scoring and credit bureaus have been theorized as key examples of ‘capitalization’, or the processes by which things become converted into capital (Muniesa et al. Reference Muniesa, Doganova, Ortiz, Pina-Stranger, Paterson, Bourgoin, Ehrenstein, Juven, Pontille, Saraç-Lesavre and Guillaum2017). Here, personal and financial data are valued for their ability to be transformed into calculative representations of creditworthiness, as well as novel streams of revenue for credit bureaus. In this formulation, consumer debt is valued as an asset that is able to be exchanged, traded and sold for profit (Fields Reference Fields2018; Leyshon and Thrift Reference Leyshon and Thrift1999). Studies of capitalization also illuminate the recent expansion of private credit bureaus into emerging markets of the global South, as new places and people are identified as profitable sites for credit reporting and as new ‘lendingscapes’ for consumer finance (Aitken Reference Aitken2017; Burton Reference Burton2012).Footnote 4 The application of credit-scoring technologies to markets in the global South makes new geographies available to banks and credit institutions, as individual consumers are incorporated into systems of surveillance and risk analysis (Leyshon and Thrift Reference Leyshon and Thrift2007). However, as bureaus expand into places where a majority of citizens are ‘underbanked’ or do not participate in the commercial banking sector (Peebles Reference Peebles2014), this means applying a standard form of credit evaluation and reporting across all institutions, in order to make millions of new, prospective borrowers legible in the same ways as customers of mainstream commercial banks.
In Africa, private credit bureau coverage has consistently increased since 2004 (Kusi et al. Reference Kusi, Agbloyor, Ansah-Adu and Gyeke-Dako2017), driven by international investment and a desire for access to ‘emerging markets’ (Burton Reference Burton2012; Tchamyou and Asongu Reference Tchamyou and Asongu2017), and also as a response to global financial crises (Olegario Reference Olegario2009). Prior to 2008, few countries on the continent had private credit-reporting bureaus and currently most private bureaus are consolidated in Southern Africa (Kusi et al. Reference Kusi, Agbloyor, Ansah-Adu and Gyeke-Dako2017; Tchamyou and Asongu Reference Tchamyou and Asongu2017).Footnote 5 As an alternative to private bureaus, many countries maintain public credit registries, which are more common forms of credit reporting globally.Footnote 6 As with private credit bureaus, public registries compile information about borrowers and their loans from regulated financial institutions, although public registries typically collect less comprehensive information on borrowers compared with private bureaus and are not able to provide consumers with services such as individual credit reports (Burton Reference Burton2012; Triki and Gajigo Reference Triki and Gajigo2014).
Public credit registries in the BCEAO region have been critiqued for reporting only a small percentage of total borrowing (Diane and Diop Reference Diane and Diop2007), not including microfinance data, and recording loans only over a fixed amount, between CFA 2 and 5 million depending on the country. Information on microfinance loans has been reviewed separately since the 1990s, in databanks managed by national ministries of finance (Allen et al. Reference Allen, Otchere and Senbet2011). It is this multiplicity of credit-granting institutions and the variation of credit-reporting systems that motivated attempts to ‘bring about a globally consistent set of criteria for assessing creditworthiness’ (Olegario Reference Olegario2009: 208).
Initiatives to reform credit-reporting systems are not unique to West Africa. Over the past two decades, the World Bank (along with the International Finance Corporation) has promoted the development of private credit bureaus globally as a means to strengthen local financial systems and attract international investment (IFC 2013). The UEMOA credit bureau project was proposed specifically as an alternative to existing public credit registries. Instead of reforming public registries to include a greater breadth of financial transactions, bank officials lobbied for a private credit bureau as an efficient, modernizing alternative.
The region was instead in need of a best practice, complete, non-fragmented credit reporting system: a sophisticated and modern private credit bureau that could compile credit histories on consumers and MSMEs [micro, small and medium enterprises], with data supplied by all the lending and service sectors of the UEMOA, including banks, MFIs [microfinance institutions], financial companies, mobile telecom operators, utilities, fintech, and e-wallets, and thereby help borrowers, especially the most vulnerable, invisible, and unserved, to build a credit history and ‘reputational collateral’ that could be used to obtain credit. (World Bank 2019)
In 2015, the BCEAO signed an agreement with a joint venture company, Creditinfo-VoLo, to establish a private credit bureau and digital credit-reporting database for the eight-country region.Footnote 7 In this model, data regarding the payment histories of borrowers is first collected by participating local financial institutions, who then transfer their data to national BCEAO offices, before it is forwarded to Creditinfo-VoLo. Based in Abidjan, the private bureau creates consumer reports and credit scores based on its review of the data, then sells access to credit reports and scoring profiles. The BCEAO aims to require all financial institutions to subscribe to the Creditinfo-VoLo’s digital platform in order to access credit scores and run credit reports on prospective borrowers.
However, the arrival of the UEMOA credit bureau project was not met with widespread participation by financial institutions across the region. Early difficulties in building a robust, cross-border, credit-reporting database stemmed from institutions declining to share their borrower data or delaying in doing so. In order to shore up credit data on individual borrowers, most UEMOA countries passed additional legislation to share all credit data collected in the several-year period between when the initial credit bureau law went into effect and when financial institutions actively began using borrower consent forms.Footnote 8 At the same time, data from public utilities, including electricity, water, mobile phone and other telecommunications, began being shared automatically with the credit bureau. By the end of 2019, the BCEAO reported that the Creditinfo-VoLo database contained records for over 7 million West Africans, including coverage of approximately 13 per cent of all Togolese adults (BCEAO 2019). Despite gains made in amassing regional financial data, tension persists between how credit bureaus and lending institutions make sense of creditworthiness, and the utility of credit-scoring practices. As I examine in the following section, while proponents of credit-reporting systems argue that credit scoring will simplify relationships between borrowers, loan officers and lending institutions, managing relationships with borrowers remains a complex and relational process for loan officers in Togo. Not simply intermediaries facilitating information between borrowers and institutions, loan officers are uniquely responsible both for making decisions about credit provision and for the management and reclamation of debts.
How credit bureaus see loan officers
In 2016, the BCEAO launched a public awareness campaign to educate and familiarize Togolese about credit information bureaus. The campaign took the form of an animated cartoon commercial that encouraged viewers to consent to sharing their information with Creditinfo-VoLo. Yet the cartoon, the goals of which were detailed in reports by World Bank partners (World Bank 2019), also offers insight into how the central bank and credit bureau partners imagined the ideal roles of loan officers and borrowers in the newly designed project of regional credit reporting. Compliant borrowers who consented to information sharing were presented as rational financial subjects, while loan officers were cast primarily as intermediaries, merely facilitating the transfer of data between borrowers, banks and credit bureaus.
Approximately five minutes long, the commercial follows a seamstress, Anita, as she learns about the new West African private credit bureau.Footnote 9 The commercial opens with Anita walking past Togo’s iconic Independence Monument on her way to apply for a loan. As she enters a generic commercial bank, Anita meets with the loan officer, a middle-aged man dressed in a suit and tie. However, Anita quickly learns that she does not possess the necessary material collateral to apply for a loan. The loan officer explains that, while the lack of collateral is a common problem for borrowers, banks continue with collateral requirements because they lack sufficient information about borrowers’ credit history. Notably similar to my interview with the credit analyst described in the opening paragraph, the cartoon loan officer recounts how a lack of information negatively impacts lenders as well as borrowers, through high interest rates and inflexible loan terms. He introduces the concept of a regional credit bureau as a solution to these issues, and a way for clients like Anita to build ‘reputational collateral’ by consenting to share personal and financial information with Creditinfo-VoLo (Breckenridge Reference Breckenridge2019; Olegario Reference Olegario2009).
The commercial presents credit bureaus as objective determinants of creditworthiness and loan officers as lacking the necessary tools and information to make informed decisions about the creditworthiness of prospective borrowers. Tensions between loan officers and borrowers are highlighted as issues of personal and subjective judgement, where loan officers evaluate clients based on appearance or guesswork versus documented credit histories. For example, in one scene a loan officer is depicted evaluating a prospective borrower while reviewing information on the computer screen and thinking to himself, ‘Hmm, is this a serious client?’ With no additional metrics for determining creditworthiness, the loan officer is left to discern whether or not a client is ‘serious’ or trustworthy.
Scholars detail how early forms of credit reporting conceptualized creditworthiness as an ‘inherent characteristic’ of the individual borrower, and the loan officer as arbiter of the true nature of a borrower’s character (Lauer Reference Lauer2017a; Reference Lauer, Raff and Scranton2017b; Olegario Reference Olegario2009). The arrival of computerized credit-reporting systems directly challenged those methods and introduced credit-scoring technologies as solutions to problems of biased human judgement (Marron Reference Marron2007). Knowledge typically gathered from personal, face-to-face interactions between borrower and lender was thus replaced by virtual or digital knowledge, as ‘subjective assessments of creditworthiness were converted into an “objective” measure of risk through the “scientific” process of credit scoring’ (Burton Reference Burton2012: 113; Leyshon and Thrift Reference Leyshon and Thrift2007). In the case of the public awareness commercial, the private credit bureau provides an alternative not only to the obstacle of material collateral but also to the subjective decision making of loan officers.
Access to prospective borrowers’ personal data is at the core of the credit bureau business model. Without access to necessary data, credit bureaus are unable to produce reliable consumer credit scoring. For these reasons, the loan officer in the commercial explains to Anita that signing the consent document is an important step in accessing a bank loan. Through the consent form, the loan officer is relieved of the work of deciphering whether or not a borrower is ‘serious’ and can instead rely on aggregated data in the form of a credit score to approve or deny borrowers for loans. When Anita speculates on the possibility that some clients may choose not to share their information, the loan officer is careful to note that refusal is certainly within the rights of borrowers, but that those who refuse to consent to information sharing are likely to be viewed negatively by banks. As the next scene demonstrates, a client who refuses to sign the consent document is labelled as a ‘Client Douteux’ – a questionable, or even suspicious, client.
Those who comply with the rules outlined by the central bank and private credit bureau are therefore viewed by loan officers and lenders as desirable candidates, while those who refuse are regarded as questionable and potentially barred from accessing credit. Consenting to the BCEAO’s request for information sharing is thus framed as a simple, bureaucratic procedure and the only rational choice for those who wish to be viewed as trustworthy in the eyes of loan officers. Holding the consent form in her hands, with the BCEAO seal visible in the upper corner, Anita confidently signs the document. The loan officer then shakes Anita’s hand, assuring her that he will notify her when the results of her credit report are available.
But while the public awareness commercial presents the loan officer as a major supporter of the credit bureau project and credit-reporting technologies, in reality, loan officers at Togolese cooperatives expressed ambivalence and doubts that credit bureaus could better predict the creditworthiness of their borrowers. As I show below, the everyday work of managing borrowers and their (often past-due) loan payments gave loan officers intimate insight into the challenges and realities of lending to working poor borrowers. Scepticism among loan officers about private credit bureaus and credit scoring, I suggest, reflects not only the challenges of incorporating algorithmic credit scoring into small-scale finance, but also the potential limits of expanding access to finance for poor borrowers through increased practices of credit reporting.
Loan officers and the work of managing risk
The past and present of creditworthiness
On the last Friday of the month, the cooperative credit office near downtown Lomé was full of clients by 9 a.m. Nico and his fellow loan officer Komla were seated at their desks in the small office they shared. The bright blue plastic chairs throughout the lobby were filled with waiting clients. Nico sat patiently listening to a client as he worked to finish the final components of a loan application. The last page to be signed in the bundle of paperwork was the BCEAO consent form. This document informed the borrower that the central bank would be notified of the loan and kept informed about the status of future loan repayments. In cooperative branch offices, the consent form was a multicoloured, carbon-copy triplicate. The white copy went home with the client, the yellow copy was stapled to the loan portfolio file, and the pink copy went in a metal basket on the corner of Nico’s desk for delivery to the BCEAO offices in Lomé.
Later that day, after the office quietened down, I asked Nico what he thought of the UEMOA credit bureau project. Would there be any benefits to having a regional credit-reporting database for small-scale lending cooperatives like this one? Might having access to credit reports for prospective borrowers make any of his and Komla’s work easier? Gesturing at the growing stack of pink consent forms, Nico paused before shaking his head. No, he didn’t think it would make his work easier. Nico considered the arrival of a private credit bureau and the possibility of being made to consult credit scores to both be fine in theory. However, it was the predictive claims of credit scoring that he found unlikely to be helpful, nor able to address the types of concerns that loan officers like himself sought to manage. To begin with, many clients were first-time borrowers and therefore unable to be captured by credit-reporting technologies. But even for repeat clients, loan officers knew that, for the majority of their clients, past actions were still only a partial assurance of their abilities to successfully repay future loans. The precarity that many borrowers faced in their daily lives meant that even a past history of repaying loans on time did not translate easily into a reliably fixed condition of creditworthiness.
This was true even for the more financially well-off cooperative clients in Lomé. Nico recalled one of the borrowers from that morning’s meetings, a middle-aged man with a fairly successful ‘pure water’ business – drinking water packaged into individual plastic sachets and sold by street vendors, restaurants and shops throughout the city. Over the past few years, the man had received several cooperative loans and repaid them fully and largely on time. In fact, the business owner was viewed as an important client for this branch office. But his last loan had fallen into delinquency, with over three months of non-payment. Initially unable to reach the client by phone or SMS, it was only this morning that Nico had learned that the man had recently suffered two motorcycle accidents, the second one resulting in an extended hospital stay. The client’s eldest son had attempted to keep the pure water business on track but had not been able to procure the necessary plastic packaging to continue production, and the business (as well as the loan payments) had been left dormant.
As the pure water case highlights, cooperative borrowers in Togo brought with them high levels of risk. Precarious work and unstable incomes meant that they were less able to recover from unexpected events such as accidents, theft or ill health. Unlike credit-scoring systems, which framed uncertainty and risk as something to be prevented (Burton Reference Burton2012; Pasquale Reference Pasquale2015), Nico instead presented the example of the pure water client as an everyday example of the kinds of challenges faced by small-scale finance institutions in Togo. By all accounts, the pure water business owner should have been a reliable client, with a history of repaid loans. In Nico’s view, the motorcycle accident that rendered his client unable to make loan payments for months on end underscored the limits of past loan repayment histories as adequate means of predicting future financial behaviour. The acceptance of risk as a generalized and commonplace condition of cooperative lending meant that loan officers were less concerned with interpreting the past actions of borrowers as they were with ensuring against future events.
The types of economic precarity common for cooperative borrowers in Lomé meant, therefore, that past actions were not as valuable to loan officers as were present forms of relational assurance, as well as the active management of borrowers and their accounts so as to ensure future loan repayments. These ‘clashes’ between ways of knowing and making sense of risk highlight very real temporal distinctions between how credit-scoring technologies represent creditworthiness as a culmination of past actions, and how loan officers relied on a range of social and material networks to interpret the potentiality of borrowers to repay in the future (Bear Reference Bear2016). However, I suggest this distinction in how risk is understood and evaluated also highlights loan officers’ knowledge of the broader structural conditions of small-scale lending in Togo. The professional practices of loan officers and their attentive oversight of loan portfolios was informed by their frequent experiences pursuing past-due loan payments as well as their less frequent (and more burdensome) experiences navigating the legal processes required to manage delinquent debt.
The predicament of unpaid debts
I first met the cooperative’s in-house lawyer who handled all delinquent debt cases at the central police station in Lomé, located off a major roundabout on the Boulevard Circulaire. That morning I accompanied the loan officer Komla to visit a borrower’s business. On the way back to the branch office, we made a detour by the police station. Komla was required to appear and sign a document that was before a judge, confirming the facts in a case of a delinquent debtor. The lawyer was an older man with wire-rim glasses who always carried with him a worn, soft-sided leather briefcase barely able to be snapped closed. Later, on interviewing the lawyer, I learned the reason for his perpetually overfilled briefcase. Cases of unpaid loans that go into delinquency in Togo take many months, if not years, to resolve in the court system. It was a tedious and burdensome process that required extensive documentation and written correspondence between the lending institution, the debtor and the legal system. Not only are court cases for delinquent debt notoriously lengthy, but they rarely produce entirely beneficial results for either the borrower or the lender. For these reasons, credit cooperatives considered legal proceedings an option of last resort for debt reclamation.
In the lawyer’s office at the cooperative headquarters in Lomé’s Kodjoviakopé neighbourhood, stacks of folders were piled on the floor surrounding his desk – creating an uneven sea of multicoloured accordion file folders. I asked the lawyer what the best way was to manage cases of delinquent debt among cooperative borrowers. I mentioned the private credit bureau and the possibility of using credit scores in the cooperative branch offices. The lawyer nodded in recognition and raised his hands up, pretending to type on an imaginary keyboard – as if accessing the credit bureau database with information about all prospective borrowers. With a small laugh, he replied that the best way was, in fact, for the debt to not become delinquent in the first place. The lawyer narrated for me various ways through which loan portfolios became delinquent – bad or unlucky business ventures with no profit, a client falls sick or has an accident, loan repayment money is redirected towards a household emergency instead of the loan, or even cases of borrowers disappearing and abandoning their loan balances. With all the unknowns that existed among the cooperative client base, loan officers remained the best option for managing borrowers and their loans in order to hedge against the possibility of loan delinquency.
Once an unpaid loan is downgraded to delinquent, cooperatives must report the outstanding debt to the Ministry of Finance. If negotiations with borrowers do not result in an amended repayment timeline, the delinquent loan is then turned over to the court system. Initial court rulings typically demand a readjusted loan repayment timeline for the borrower, and sometimes request a reduction in the monthly loan payment amount. If the borrower does not begin loan repayment following the initial court ruling, the court considers possible punitive measures, such as the confiscation of assets or time in jail. However, such measures do little good for small-scale lending institutions such as cooperatives. Rarely do borrowers have material assets or real estate suitable for reclamation, and the bureaucracy involved in seizing assets is tedious, potentially requiring years to resolve in the court system.
Elsewhere on the continent, rising over-indebtedness has led to extreme examples of debt reclamation. In South Africa, a marked increase in lending in the 1990s led to courts allowing lenders to obtain loan payments from past-due debtors directly from their salaries or state social grant payments (James Reference James2014). In other cases, informal lenders withheld borrowers’ ATM cards in order to withdraw monthly loan payments as soon as monthly pay cheques were deposited into their accounts (ibid.). Past-due debts in these cases were forcibly, and sometimes violently, reclaimed from indebted borrowers. In Togo, the regulation of the formal small-scale lending sector incorporated borrower protection mechanisms that, to some degree, have prevented similar cases of extreme debt reclamation, although punitive measures including time in jail remain (Ashta and Fall Reference Ashta and Fall2012). While the existing legal options for pursuing delinquent debt payments may shield borrowers from more aggressive forms of debt collecting, they often result in lengthy, protracted court cases.
It is for these reasons, as the lawyer described, that loan officers bore the responsibility of not only screening prospective borrowers, but managing their loan repayments. In the lawyer’s view, diligent oversight of loan portfolios was the best way to avoid legal recourse for delinquent debt. Additionally, the lawyer’s experience overseeing debt reclamation cases informed his broader view of the structural conditions of small-scale lending in Togo – past-due loan payments were common with cooperative borrowers, and loan officers were the ones best suited to prevent past-due loans from becoming delinquent. While the private credit bureau and credit scores were possibilities that the lawyer acknowledged, he did not believe that the availability of a credit score would be a particularly reliable tool to address the kinds of challenges that cooperatives faced. Instead, the lawyer considered the careful oversight of loan officers to be the most practical way for cooperatives to manage the risk of lending in what was an admittedly high-risk environment.
The ‘real work’ of cooperative loan officers
At a smaller cooperative branch in the north-eastern corner of the city, past the airport, Anani and Phillipe were the two primary loan officers. Both young, in their mid-twenties, they kept the credit office lively with their jokes and eagerness to share opinions about their work and their impressions of cooperative clients. After returning one morning from an early trip to visit a client at home, the two were commiserating about how tiring their work could be. They had left at 7 a.m. in order to meet a client before he left for his maize farm, making the thirty-minute drive on their motorcycles over rough roads, where the city fades into open fields and the occasional cultivated plot of land. Now back in the office, Anani was joking that Phillipe, who rested his head on his folded arms, eyes closed, couldn’t handle the ‘real work’ of being a loan officer. ‘On-the-ground work, like this,’ Anani explained – moving around the city and rural areas, locating clients, trying to collect loan payments – that was the real work. Counting money from his pocket, Anani filled out a deposit slip with the funds they had collected from that morning’s client. Anani and Phillipe’s ‘on-the-ground’ work had resulted in retrieving a partial loan payment for a past-due account.
Managing loan portfolios and clients was often intensive work that required the personal engagement of loan officers in the lives and businesses of their clients. In order to keep accounts current, and to avoid delinquent status, loan officers spent hours each day calling and messaging clients, or travelling to their homes to meet with them. Writing in other contexts, anthropologists have shown how ‘the work of loan officers is both mundane and eventful’ (Kar Reference Kar2018: 84). At cooperative offices in Lomé, many long afternoons were spent trying to get in touch with past-due account holders, afternoons that were occasionally punctuated by an answered phone call, a borrower’s appearance in the credit office, or the collection of a partial loan repayment. In practice, this meant that many loan officers found their ‘real work’ to more closely align with that of a debt collector – constantly concerned with the upkeep of past-due accounts. In Zambia, microfinance loan officers have been shown to face similar predicaments, acting more like ‘loan repayment agents’ and ‘debt collectors’ than employees of a participatory development organization (Siwale and Ritchie Reference Siwale and Ritchie2012). It is worth noting that this work of constantly managing delinquent debt and pursuing past-due borrowers can easily become harmful. Scholars of microfinance, in particular, have documented the negative – and often violent – effects of the constant presence of money collectors in the lives of the poor (Kar Reference Kar2018; Karim Reference Karim2011; Schuster Reference Schuster2015). Overbearing loan officers who pressure or threaten clients for loan repayments contribute to our understandings of the pervasive power imbalances common in small-scale lending.
But unlike the loan officers represented in the public awareness commercial, depicted as simple intermediaries facilitating the exchange of information between borrower and credit bureau, Anani and Phillipe inhabited roles that were more complex and less straightforward. During one of the last weeks of December, and before the close of the fiscal year, Anani and Phillipe were trying to collect loan payments on past-due accounts in order to make all outstanding loan portfolios current. Phillipe had one set of borrowers who took out a loan together – seamstresses with a sewing stall set up next to one of their homes. Late on a Thursday afternoon, Phillipe announced that he was going to visit the seamstresses to try to collect a loan payment. I followed Phillipe downstairs to accompany him on the visit. As we passed through the lobby of the branch office, Phillipe called out to the two employees behind the teller windows that we were going to ‘find money!’ and bring back a loan payment. The two tellers smiled and cheered on Phillipe, saying that they would be waiting for the money on our return.
When we arrived at the sewing stall, Phillipe respectfully greeted the seamstresses. They waved to us both and offered us stools next to a table piled high with fabric. Phillipe inquired how business was going and the women answered good-naturedly that they were working, as we could see! But many people had not yet come to collect and pay for clothing they were having sewn for the holidays. Soon though, customers would come to pay, which would allow the seamstresses to make their loan payment. Phillipe nodded while listening to the seamstresses, and when they finished he thanked them for taking time to talk with us. He agreed to return again after the holidays to collect a loan payment. Phillipe was quiet on the short drive back to the branch office. Walking through the lobby, he waved in the direction of the teller windows, each draped with shiny holiday tinsel decorations, but we didn’t stop to chat. The seamstresses’ loan would remain a past-due account on the end of year balance sheet, after which time Phillipe would return again to their sewing stall to hopefully collect a loan payment.
Loans to support the work of seamstresses and tailors were common at credit cooperatives. As demonstrated in the public awareness commercial, seamstresses were a quintessential example of a small-scale credit seeker in Togo. Alongside other key areas, such as market vendors, caterers and hairdressers, the work of seamstresses and tailors is seen as a core income-generating activity in the field of microenterprise development (Perry Reference Perry2002). Such activities have clear pathways for training and apprenticeship as well as observable work patterns and outputs, for instance a tailored dress completed for a customer. These characteristics made seamstresses and their work legible to lending institutions and widely seen as reliable investments in terms of creditworthiness and risk. However, while seamstresses may embody ideas of the ‘ideal’ and self-sufficient entrepreneur in the view of lenders (Prentice Reference Prentice2017; Radhakrishnan Reference Radhakrishnan2018), the nature of their work made seamstresses dependent on their clients’ ability to pay for services rendered.
The two seamstresses visited by Phillipe highlighted how cooperative borrowers themselves were impacted by the abilities of others to pay their debts. As the holiday season approached, the seamstresses awaited payments from their clients. Stacks of tailored clothing packed away in individual plastic bags occupied half of one long table on the covered veranda of the seamstresses’ sewing stall. Without payment from their clients, the seamstresses were unable to make a payment on their past-due cooperative loan. Although Phillipe was eager to collect a loan payment for his end of year balance sheet, the payment timeline of the seamstresses’ clients did not align with their own loan repayment timeline. Such disjuncture left the seamstresses waiting under the veranda of their sewing stall, keeping busy with future orders for future payments. As the horizon of loan repayment extended into the coming year, the seamstresses’ debt became further enmeshed with the debts of their clients. Left with little option but to wait as well, Phillipe agreed to return after the holidays.
Overall, it was clear from my ethnographic work that managing loan portfolios and past-due debt was a key feature of cooperative lending in Lomé. Furthermore, the ways in which cooperative employees understood the risks of small-scale lending did not align easily with the styles of risk analysis and management promised by the UEMOA credit bureau project or with credit-scoring technologies. Nico’s scepticism that credit scores would indicate cooperative borrowers’ likelihood to repay is informed by his understanding of the precarity of borrowers’ lives and work. The idea of creditworthiness as a culmination of past actions did not account for the dynamic ways in which borrowers could be impacted in the present and unable to repay loans. Employees therefore understood risk in cooperative lending to be both commonplace and unpredictable. For the lawyer, his experiences navigating delinquent debt cases led him to underscore how managing debt payments in-house was far more desirable than pursuing legal routes of debt reclamation. In his view, this meant that loans required the everyday oversight and maintenance of loan officers to successfully collect loan payments and ensure against delinquent debt. Employees such as Phillipe and Anani demonstrated what this type of work entailed in practice. Anani’s view that the ‘real work’ of loan officers was the everyday tedium of pursuing, and sometimes collecting, loan payments accounted for the ways in which successful loan management meant that loan officers also functioned as debt collectors. In these ways, the structural conditions of small-scale lending in Togo meant that the management of risk in cooperative branch offices was also very much about the management of debt. It was this knowledge that informed how cooperative employees viewed the arrival of a private credit bureau, and their scepticism that such transformations would aid in the crucial ‘real work’ of ensuring that loans were eventually repaid.
Credible futures
This article has explored the emergence of a private credit bureau in West Africa amidst promises to increase the quantity and quality of information about borrowers, while also expanding access to credit across the region. While the UEMOA credit bureau project proposes straightforward methods for collecting and analysing borrower data, in practice this requires new understandings of acceptable forms of risk and how to manage it. In Togo, cooperative loan officers are doubtful that the new forms of data analysis and credit scoring will improve their ability to evaluate clients, or their ability to manage loans and debt repayments. Loan officers make sense of creditworthiness and risk as dynamic and relational measurements, dependent on the precarity of borrowers’ lives and work, and the related conditions that affect their ability to repay loans on time. Differing ideas about what makes for a creditworthy borrower, and what are useful metrics to ensure loan repayment, therefore point towards the possible limits of credit-reporting technologies in the field of small-scale finance.
As private credit bureaus continue expanding into new markets in the global South, and states and regions increasingly rely on large-scale data collection and analysis to make decisions about access to credit and finance, it is worth examining the effects of private credit reporting, both on borrowers and on existing financial institutions. While efforts to include the poor into networks of finance and debt have been well documented, often through a narrative of ‘banking the unbanked’, credit reporting and scoring demand ever greater access to personal and financial data (Elyachar Reference Elyachar2005; James Reference James2014; Schwittay Reference Schwittay2011). Scholars have shown how the incorporation of more people into systems of credit reporting and surveillance does not necessarily produce equitable access to credit; in fact, it may often exacerbate existing forms of inequality and barriers to financial services (Singh Reference Singh2015; Van Gool et al. Reference Van Gool2012). Particularly for those previously ‘invisible’ to commercial credit markets, having no documented credit history may in fact be preferable to a bad credit history or score (Wu Reference Wu2015). Indeed, being included in formal financial systems has the corollary effect of leaving vulnerable borrowers with ‘less place to hide’ (James Reference James2014: S21). Attending to the concerns or scepticism of Togolese loan officers as they reflect on the arrival of new credit-reporting technologies encourages us to consider the potential impacts of shifting methods for evaluating who qualifies as creditworthy and why.
Vanessa Watters Opalo is a PhD candidate in Anthropology at Northwestern University.
