Pilot Insights | Microfinance onchain: Unlocking credit in Ghana using stablecoins and reputation-based lending
Mercy Corps Ventures partnered with Haraka and the Grameen Foundation to launch a pilot to test how microloans, denominated in local currency stablecoins (cGHS) can be underwritten using social reputation and peer guarantees, rather than traditional collateral. The pilot focused on Village Savings and Loan Associations (VLSAs) for women. In total, 47 VSLAs were onboarded, representing more than 500 borrowers, 90% of whom were women, receiving $57,000 in credit using cGHS. Borrowers accessed loans via a browser-based dApp, without needing to download an app or manage crypto wallets. Repayments were made through USSD and smart contracts and stablecoins automated back-office processes that are traditionally manual, slow, and expensive, demonstrating strong operational impact.
Insights in Brief
Blockchain-based group lending reduced disbursement time by 99.7% from 3-7 days for MFIs to under 5 minutes. Using smart contracts and on-chain liquidity eliminated travel costs and the need for manual collections. The entire loan disbursement process was completed in a single group meeting.
The pilot demonstrated that DeFi lending with local currency stablecoins can deliver fast, low-cost, and reliable credit in mobile-first, low-bandwidth settings. Onboarding, disbursement, and repayment worked smoothly without apps, seed phrases, or blockchain knowledge, though occasional outages caused delays. Local stablecoins reduced FX risk and volatility, making “crypto” invisible but useful, and building user trust through faster, cheaper access to credit.
Borrowers, mainly women, used loans to grow small businesses, pay school fees, and invest in climate-resilient farming. Timely, collateral-free credit strengthened households, reduced dependence on male earners, and eased income-related stress.
The pilot recorded a 96.9% principal recovery and an 86.5% full repayment rate, with most defaults linked to timing and liquidity issues rather than unwillingness to pay. Seasonal cash flow gaps and failures in the mobile money stack disrupted repayments, eroding trust and obscuring the true drivers of defaults.
This report is the second in a three-part series. The first blog outlined the pilot launch, learning questions, and the hypotheses we set out to test. This edition focuses on the solution’s impact, along with key insights and lessons from phase one. The final report will share findings from the concluding phase of the pilot.
Written by Timothy Asiimwe, Innovation Project Manager, Mercy Corps Ventures.