How psychometric testing is making sanitation accessible in Ghana

“Would you rather have $1,000 now or $2,000 in 6 months?”  These are the kinds of questions Sama Sama asks when deciding who should receive a payment plan for a new toilet.

LenddoEFL is partnering with iDE Ghana to deliver a mobile-based credit risk model for assessing loan worthiness. The financial survey employs a psychometrics-based predictive model based on research that has shown it is possible to assess credit-worthiness based on a series of questions.

The results of the survey are used by iDE’s Sama Sama Social Enterprise to approve applicants for a line of credit which allows them to purchase a new personal toilet for their household. 

iDE is a global NGO with a mission to create income and livelihood opportunities for poor rural households. They have been working in Ghana since 2010. Sanitation is an ongoing challenge in Ghana. According to Unicef, “As at 2015, only one rural household out of ten were using improved household toilets”

Before partnering with Lenddo EFL, iDE Ghana was using a paper application, which was time-consuming and costly for both the application and processing. By using LenddoEFL’s score instead, iDE reduced it’s turnaround time from 2 weeks to 2 days. This enabled iDE to process more customers and reduce its cost of acquisition and increased it’s loan portfolio significantly as a result - All this while keeping the NPL% at the same level. 

The psychometric testing has been created to meet Ghana-specific market needs. It takes around 30 mins to complete on an Android device. Applicants work their way through a series of questions which assess their credit-worthiness based on factors such as fiscal responsibility, understanding the time value of money, and their internalized norms.

By helping iDE Sama Sama to reduce the acquisition cost and grow their loan portfolio, our partnership has helped to make more affordable toilets available to Ghanians who need them. 

In the words of Sama Sama,

“This will make the unproven market a bit more proven, spur further finance innovation in the development sector, and get more important products and services to the underserved.”

Photo by Virgyl Sowah on Unsplash

Blog | iDE Ghana increases access to sanitation with help of innovative credit assessment from LenddoEFL

Partnership allows Ghanaians to purchase their first toilets

Globally, 32% of people lack access to a toilet in their homes (Source: WHO UNICEF JMP). In Ghana an astonishing 87% of people do not own a toilet. And in rural Northern Ghana, it is worse still. Two out of every five children in northern Ghana are stunted, compared to approximately 20% of children stunned nationally (Source: UNICEF).

iDE Ghana, a nonprofit that creates income and livelihood opportunities for poor rural households, wanted to improve sanitation in the region. They began by applying design thinking to understand the low rate of toilet use. It turned out that people didn’t know where to buy a toilet, and if they did, it was prohibitively expensive to buy.  People could not afford the full cost all at once, and there were no options to pay for a toilet over time, as there were for other large purchases.

"What we found was the criteria for borrowing towards non-income generating loans were ridiculous. So we set up a one stop shop for toilets and sanitation products, selling them door to door,” explained Valerie Labi, WASH Director at iDE Ghana. “And the beauty of the model is that we give our customers 6 to 18 months to pay the toilet off over time.”

This seemed like the perfect solution given the challenges to toilet purchasing uncovered, but it was still challenging. “We allowed people to pay over the course of 6 to 18 months but we required for the customer or a guarantor to prove their income with bank statements or payslips. And this was a big deterrent. No one wanted to give their bank statements to a toilet company. And it would take an average of 40 days to get through the process” Labi shared. “We realized these requirements were scaring away customers as they’d never had formal credit before. So we asked ourselves, how else could we assess creditworthiness in a more inclusive way?”

That’s when they came across LenddoEFL universal credit assessment. By collecting behavioral and psychometric data at the time of application, iDE’s commercial agents will be able to assess risk and make a decision in a day or less, cutting down the time to sale greatly. Previously, the commercial agent made multiple calls and visits to collect the required documents. By using the LenddoEFL score, iDE removes the need for a guarantor or proof of income for the best scoring customers. Low scorers will need to pay 50% of the cost of the toilet in monthly installments before receiving the toilets.

iDE’s goal is to provide 20,000 to 25,000 toilets to households in Northern Ghana. At an average of 11 people per household, this will provide life-saving sanitation for 275,000 people. And the plan is to sell toilets as part of a fast, convenient customer-driven process and at affordable rates. With the LenddoEFL assessment in place since February 2018, iDE is already receiving positive feedback for customers who enjoy the process. Stay tuned for updates on this exciting partnership.