Ghana’s financial inclusion rate is relatively high, with 58 percent of adults having an account of some kind in 2017. By December 2017 there were 11.4 million accounts with licensed financial institutions, and 24 million mobile money accounts, according to the latest Digital Access: The Future of Financial Inclusion in Africa report.
Some banks have started to engage actively in providing digital finance services (DFS), such as Fidelity Bank’s Smart account; a card-based account with abridged KYC requirements that can be used with digital point of sale (POS) devices for a range of transactions. They can also manage payments through Cloudpay Payroll.
However, most DFS activity is via mobile network operator (MNO) wallets. Over 2016 the amount held in mobile money accounts rose by 85 percent, and active users grew by 71 percent to 8.3 million.
About two-thirds of the population are mobile phone subscribers, meaning Ghana substantially outperforms most of Sub-Saharan Africa. Internet usage via smartphones and feature phones is also high at 45 percent, supported by widespread 3G coverage.
There are nine registered MNOs with the top four (MTN, Vodafone, Tigo and Airtel) being responsible for over 97 percent of all mobile communications and also providing the four mobile wallets on offer.
MTN dominates mobile wallet usage with over 90 percent market share. In early 2018, Tigo and Airtel merged, and the impact this will have upon the companies’ respective DFS offerings is yet to be seen.
DFS support a wide range of transactions including domestic and international remittances, utility payments, bulk payments (such as salary payroll and social payments) and transfers between wallets and conventional bank accounts.
In 2016, Ecobank launched the TBILL4ALL service, the first service of its kind allowing the purchase of treasury bills using mobile money.
More recently, interest bearing savings have been made available, such as the ‘MTN Y’ello Save’ service launched in 2017 in partnership with Fidelity Bank.
In 2016 the central bank approved interest payments on funds held in mobile wallets, and in 2017 the MNOs paid their customers approximately US$ 16 million in interest.
Micro-lending and micro-insurance services are also available, although they have yet to achieve scale. The Bank of Ghana first issued DFS guidelines in 2008, intended to promote interoperability and open access, and included the requirement for multiple banks to hold the MNO e-money float.
However, this is now considered to have slowed early DFS growth, due to the unintended consequences of dilution of the potential benefit to banks creating a reluctance to invest, plus the difficulty in getting agreement between multiple partners.
New e-Money Issuer (EMI) Guidelines were issued in 2015 requiring each MNO to set up a separate business for its DFS, and to obtain an EMI license, bringing mobile money directly under the supervision of the Central Bank.
A new switch is being developed by the Ghana Interbank Payments and Settlement System (GhIPSS) to provide interoperability between mobile wallets.
The interoperability system was recently launched in Ghana with the support of the government, MNOs and the other stakeholders. It will also be able to route transactions between wallets and bank accounts.
A second phase of interoperability is planned, linking this platform and the existing e-zwitch biometric card and POS system. The opportunity that DFS offers to increase efficiency, transparency and security of these transactions is significant.
A study of DFS economic indicators for the central bank payment systems department concluded: “Development of the mobile money sub-sector encourages financial inclusion and deepens the payment systems. Mobile money sub-sector is therefore one of the key drivers of the payment systems in Ghana.”
Ghana has a fast-growing economy that has experienced sustained GDP growth in recent years. Over half the population of 27.5 million now lives in urban areas, and the service sector provides over 40 percent of all jobs.
However, the largest employer is still agricultural (45 percent), mainly in the form of smallholder farming. With economic growth, there has been significant progress in poverty reduction and just 13.6 percent of the population now lives below the poverty line, although this figure is higher in rural areas.
The Ghanaian economy has suffered from falling commodity prices, soaring inflation and the currency losing value over the last few years.
As a result, the central bank increased its minimum capital requirements for banks. The consumer credit market in Ghana is tight and expensive, with most banks preferring to keep deposits in treasury bills that are at a current one-year interest rate of 15 percent.
African Eye Report
