Fintech companies across Africa are building credit‑scoring models that rely on non‑traditional data such as mobile‑money transactions, airtime top‑ups and utility bill payments, aiming to extend credit to adults who historically have no formal credit history. The shift follows Nigeria's Digital, Electronic, Online or Non‑Traditional Consumer Lending Regulations that took effect on 21 July 2025, limiting the use of invasive phone data and compelling lenders to register with the Federal Competition and Consumer Protection Commission (FCCPC).
Key points:
- Lenders like Tala, Branch and M‑Shwari have been using machine‑learning on alternative data for several years.
- Kenya proved the model works, while Ghana’s Fido Score and Nigeria’s CreditChek are adapting it for micro, small and medium enterprises (MSMEs).
- A 2026 International Finance Corporation study identified 448 global alternative‑scoring firms, with Africa accounting for 15.2 % of them and 21.7 % of those focused on MSMEs.
- Nigeria’s regulator has fined non‑compliant firms up to N100 million and the Data Protection Commission has issued notices to over 1,300 entities.
How is a credit score derived from behaviour?
The principle is simple: infer repayment probability from observable financial habits. A borrower who consistently tops up mobile airtime, receives regular transfers and rarely lets a digital wallet run empty presents a lower risk profile than someone with erratic activity, even if neither has ever taken a loan. Kenya served as the testing ground, where platforms such as M‑Shwari demonstrated that short‑term micro‑loans could be priced and recovered using phone‑based transaction data. The approach has since spread to Ghana, where lenders employ proprietary tools like the Fido Score, and to Nigeria, where CreditChek raised $600,000 to expand its alternative‑data service into East Africa, citing a $331 billion financing gap for MSMEs.
Are traditional banks joining the movement?
Yes. Established institutions are now blending alternative and conventional data in their underwriting. TransUnion Africa partnered with API marketplace Chenosis to feed both data types into credit profiles in South Africa, Rwanda and Zambia. Singapore‑based CredoLab entered South Africa with two banks and an airtime‑credit provider as early adopters. South African startup Omnisient was highlighted by Bloomberg as a 2026 African fintech to watch for helping banks and insurers assess customers excluded from affordable finance. Payments processors such as Interswitch argue that the millions who transact outside formal banking channels generate a rich transaction trail that can be transformed into credit‑worthy signals.
What regulatory changes are shaping Nigeria’s market?
Nigeria’s FCCPC introduced rules that explicitly ban lenders from accessing borrowers’ contact lists, call logs and photos. Lenders were required to register by 5 January 2026; by that deadline, 521 companies fell under the commission’s oversight. Penalties for breaches can reach N100 million, while the Nigeria Data Protection Commission has issued compliance notices to more than 1,300 organisations for alleged privacy violations. Enforcement was briefly halted after a Federal High Court injunction filed by the Wireless Application Service Providers Association of Nigeria, which challenged the rules in the context of airtime‑and‑data lending disputes. Nonetheless, the regulatory trajectory pushes lenders toward cleaner, less invasive data sources and may elevate the role of formal credit bureaus.
What are the limitations of alternative scoring?
Relying on phone behaviour can unfairly penalise users who share devices, experience frequent power outages or live in areas with poor network coverage. Consent and data‑protection issues remain unresolved wherever large volumes of personal and business information are collected. Moreover, models that succeed with small, short‑term consumer loans do not automatically translate to larger business credit, where cash‑flow statements and traditional bureau data still carry weight.
What should observers watch next?
Fintechs that pioneer alternative scoring are, in effect, creating the credit histories they need. Each successfully repaid loan becomes a data point that can be reported to bureaus, enabling borrowers to move from a first‑loan to larger, subsequent financing. The next phase will depend less on more sophisticated algorithms and more on clear regulatory guidance about permissible data and on lenders sharing repayment information widely enough to build a cumulative credit record for underserved Africans.