The overall cost of providing credit is high both in Ghana and Zambia. In 2018, the cost of credit relative to their average portfolio ranges between 26% and 103% for the Ghanaian institutions and between 53% and 80% for the Zambian institutions in the study.

There is a high diversity of the cost of credit across different types of institutions and different credit products. Economies of scale contribute to lower costs of credit.

The cost of operations is the main component of the cost of credit amongst the institutions studied. It varies widely, from between 37% to 80% amongst the institutions, due to two internal factors: product portfolio composition and composition of operational expenses.

Banks that provide credit to corporates have relatively lower operational costs than those providing credit to micro-enterprises and personal loans. Further, staff costs dominate the cost of operations, contributing on average to 52% of total costs.

The cost of funds is driven by the ability to attract cheap sources of funding. Deposits are the cheapest source of funding, but blend financing is also attractive.

There is a high variation in the cost of risk, attributed to both internal and external factors.