LiberBank Found 12,000 First-Time Borrowers Using an Algorithm. Here's How.

LiberBank, one of Liberia's mid-sized commercial banks with total assets of approximately $220 million, reported a 40% increase in its SME loan portfolio in fiscal 2025, driven by a credit assessment partnership with a Nairobi-based fintech firm that has deployed alternative credit scoring models across five East and West African markets. The partnership, which began in early 2024, uses a combination of mobile money transaction history, mobile phone usage patterns, and utility payment data to generate credit scores for borrowers who lack the formal bank account history, payslips, and collateral that traditional bank lending criteria require. The bank made approximately 12,000 new loans under the programme in its first full year, with an average loan size of $1,800.

Traditional credit assessment in Liberian banking relies on proof of formal employment, salary certificates, and collateral — typically residential property or a vehicle. This framework systematically excludes the majority of Liberia's economically active population: informal traders, market vendors, farmers, artisans, and micro-enterprise owners who have cash flow but lack the documentation that banks require. The result is a structural credit gap estimated by the IFC at approximately $800 million in unmet SME financing demand annually — demand that is currently served, at very high cost, by informal moneylenders and rotating savings clubs.

The alternative scoring model developed by the Nairobi fintech — which TrueRate is not identifying by name at the company's request pending a public announcement — analyses up to 400 data variables to predict creditworthiness. In a pilot phase conducted with 2,000 LiberBank applicants in 2023, the model outperformed the bank's traditional credit officers on default prediction with a Gini coefficient of 0.68, versus 0.51 for the traditional model. The commercial rollout in 2024 produced a non-performing loan ratio of 5.8% on the alternative-scored portfolio — higher than the bank's prime commercial loan book but within the bank's risk appetite given the higher expected returns and the social development mandate of the programme.

The loan terms under the programme are: $500–$10,000 per borrower, 12–24 month repayment periods, interest rates of 18–21% annually. The rates are not cheap, but they are significantly below the 40–60% monthly effective rates charged by informal moneylenders who serve the same segment. LiberBank has deployed the product through a combination of mobile application and USSD-based origination, meaning borrowers do not need to visit a branch. Disbursement is into the borrower's mobile money wallet; repayments are collected via standing order on the same wallet.

The 12,000 first-time formal borrowers represent a meaningful — if still small — step toward financial inclusion. The CBL's financial inclusion strategy targets a doubling of the share of adults with access to formal credit from approximately 12% to 25% by 2028. LiberBank's programme is one of three similar initiatives currently active in the Liberian market; taken together, they represent a genuine shift in how credit is being originated and assessed. The constraint on faster scaling is capital: LiberBank would need to raise additional Tier 1 capital to significantly expand the loan portfolio, and the bank is currently exploring a rights issue and a potential development finance institution investment to fund that growth.