Borrowed trust: Africa and algorithms
- Gillian Jones
Will Africa’s digital financial revolution overcome the legacy of credit exclusion – or deepen it? Which institutions of trust could make it work?
The lack of access to credit for many Africans has been a developmental handicap, preventing progress and prosperity. This could be changing, as digital offerings such as biometric IDs, automated credit scoring and asset registers make loans and credit accessible to millions, unlocking development opportunities. But it could also expose people to surveillance, new forms of exploitation and overwhelming debt.
“Debt has been fundamental to creating prosperity in many parts of the world," says Professor Keith Breckenridge from the .
Credit was key to the functioning of the early modern English economy but from the end of the 1600s the Bank of England began issuing long-term bonds to raise money to fight wars, enabling them to become the dominant world power.
“This changes everything. It gives us capitalism … and institutional economists would say this moment is what ultimately generates prosperity,” says Breckenridge, pointing out that the bond market was made possible because lenders were also parliamentarians who trusted that the state’s contracts would be honoured.
African countries did not follow the same path. For most of their history under colonial rule, they were prohibited from borrowing in their own names. Export profits, especially from the slave trade, as the Nigerian historian Joseph Inikori has shown, fostered financial institutions and innovation in England, while most Africans were denied access to formal credit from the 1920s.
The result was a form of what Professor Deborah James, formerly of µÚÒ»³Ô¹ÏÍø University, terms “credit apartheid”: white settlers, foreign traders and colonial governments could access capital but Africans could not.
Credit and trust in societies
Credit is the best way to measure the level of trust in societies, according to Bruce Carruthers, a US sociologist. In his 2022 book The Economy of Promises: Trust, Power and Credit in America, Carruthers argues that credit relationships make trust concrete, observable and quantifiable in a way that abstract ideas of “social trust” do not. Credit is a promise to repay borrowed money in the future and the entire credit system is built on evaluating whether that promise can be trusted.
Breckenridge says that this credit data collection was traditionally backed by “paper-based instruments used to identify people – a driver's licence, a passport, a birth certificate or some other identity document that shows you are a respectable citizen, often drawing on land ownership or a lease.” This excluded a vast section of Africa’s population.
Technology could lead Africa to prosperity – or despair?
Breckenridge suggests that digital infrastructures, such as biometric identification systems, digital financial platforms and algorithmic scoring, can bring millions of unbanked people into the formal financial system, opening access to formal credit.
Linking biometric identification, such as fingerprints, to social relief cash-transfer programmes can be a more reliable, cheaper way to reach those who need support, while also reducing opportunities for corrupt intermediaries to steal from the poor.
However, these digital systems also create “biometric capitalism” where private corporations overwhelm public regulators. In many African countries, commercial banks and data-processing firms have funded national biometric identity systems to create centralised population registers, in part to resist the development of a single platform monopoly.
The commercial actors benefit as they can use data such as online betting activity and transactions to evaluate which citizens in the database are “appropriate” for loans. Previously “invisible” populations have now become automated subjects of debt and risk assessment.
“Private firms effectively own or control the infrastructure that determines credit risk, locking citizens into long-term debt and deepening forms of technically mediated debt dependence rather than creating real prosperity,” says Breckenridge.
Open to people, closed to business
While biometric systems are opening credit to individuals, small and medium-sized businesses across Africa still struggle to access credit, which they need to grow.
“The shift to biometric lending is encouraging business owners to borrow in their own names, as it is easier than doing it through their firms,” says Breckenridge. A lack of access to credit stifles the growth of smaller businesses, which has knock-on effects, as these businesses create jobs, pay taxes and build infrastructure.
“South Africa’s National Credit Act was meant to strengthen consumer protection and improve access to better-quality credit, including for smaller companies. Instead, the Act has been instrumental in driving credit away from commercial enterprises and towards biometric lending to individuals,” says Gabriel Davel, Research Associate at WiSER. Davel was Policy Adviser to the Department of Trade, Industry and Competition and advised the Department in the drafting of the National Credit Act in the mid-2000s.
While consumer credit has been growing over the past 15 years, the Small and Medium-sized Enterprises (SME) loan book has shrunk, wrote Davel, in an opinion piece in 2025. This is a problem, as the SME sector remains one of the few routes into work for the country's millions of unemployed people.
"The lack of bank finance is clearly not the only factor, but it is a big factor," Davel says. “Part of the problem lies in how credit information flows. South Africa's credit bureaux are good at sharing data on individual consumers, but bad at sharing data on business loans, thus blocking the kind of automated credit scoring that has expanded lending to individuals.”
How can we build trust?
Davel proposes making it compulsory for banks to report business credit to the bureaux, opening the door to the same scoring and automation that has transformed consumer lending.
Digital networks build confidence when the system works as promised. However, that same reliance builds mistrust as it can expose users to cybercrime.
To build trust in digital biometric systems, Breckenridge calls for professional intermediaries, similar to notaries, who can act to correct errors or prompt unresponsive officials. Professional self-regulation, the threat of a negligence claim and in the last instance, criminal prosecutions, keep fiduciaries accountable. Intermediaries working alongside strong regulation offer a path to trust.
Control, not inclusion, decides who profits
Africa's chances of harnessing credit to create broad-based prosperity depend on who builds, governs and profits from biometric systems. Left in the hands of private players chasing profits, under weak regulation, these systems may include more people on paper but leave the deeper question of trust unresolved.
Until that changes, debt in Africa risks repeating an old pattern in a new form: extracting value from the many to benefit the few who control the infrastructure.
- Gillian Jones is a freelance writer.
- This article first appeared in CURIOS.TY, a research magazine produced by  and the .
- Read more in the 21st issue, themed #Trust — the invisible glue binding society, science and technology.