Innovative technologies, new administrative developments and the expansion of financial access points have helped transform Ghana into Africa’s fastest-growing mobile money market, according to a new report from the World Bank. The “Enhancing Financial Inclusion” report, released by the bank in June, highlighted mobile money’s role in improving broader financial access in the country.
Using figures from the bank’s Global Findex Database, the report stated that the percentage of Ghanaian adults with a registered financial account increased from 41 percent to 58 percent between 2014 and 2017. This rise was largely led by the increased uptake of mobile money, with the percentage of adults who hold such accounts jumping from 13 percent to 39 percent over the period.
Bank of Ghana (BoG) data shows that registered mobile money accounts rose six-fold between 2012 and 2017, from 3.8m to 23.9m, while the value of transactions increased from GHS594m (US$109.8m) to GHc155bn (US$28.7bn), before increasing again by another 43 percent last year to total GHc233bn (US$43.1bn).
Improved mobile phone access drives growth
A major factor behind the rise in mobile money usage is increased access to mobile phones. “Mobile phone penetration has created opportunities for the expansion of financial services and increased the role of non-financial institutions as much as e-money issuers, positioning Ghana as the fastest-growing mobile money market in Africa,” the World Bank report stated.
The expansion of mobile phone usage as a driver of mobile money growth has also been supported by a growing agent distribution network, with the number of active mobile money agents – which offer users cash-in and cash-out opportunities – increasing from 5900 in 2012 to 152,000 in 2017.
Another factor that has helped facilitate expansion was the launch of Ghana’s interoperability platform in May last year, one of the first such systems in Africa. Set up by Ghana Interbank Payment and Settlement Systems, a subsidiary of the BoG, the platform allows customers to transfer money between mobile money accounts operated by different countries, as well as between banks and other financial institutions.
New laws to boost digital payments
While mobile money in Ghana has witnessed significant growth in recent years, a series of new reforms are expected to stimulate further activity for digital payments in the country. The Electronic Payment and Financial Services Law, effective as of July, will allow banks to directly operate their own mobile money vending points, a move expected to lead to greater competition within a market currently dominated by telecoms companies.
This has also been supported by the Payments Systems and Services Act, approved by the president in May. The new legislation, which has updated a series of previous laws governing payments systems and electronic money operations, will see the BoG receive increased powers in terms of regulating the mobile money market, thereby providing more certainty to potential investors.
Financial inclusion and a “cash-lite” economy
Mobile money and digital payment are central to Ghana’s plan to expand financial inclusion and move towards what it calls a “cash-lite” economy. As part of the National Financial Inclusion and Development Strategy 2017-23, officials hope to increase financial inclusion to 85 percent by 2023, which is in turn expected to help reduce poverty and improve levels of social and economic development across the country.
Given that mobile money makes up some 97 percent of all non-cash transactions, it is seen as a key tool in reaching this goal, Kojo Choi, CEO of local digital payments company PaySwitch, told OBG in a recent interview.
“Considering that an estimated 65 percent of the population does not yet have bank accounts, cash-free mobile has become the means of financial inclusion for much of the population. ”However, despite the proliferation of digital payments, cash remains the dominant form of payment in Ghana. The government is keen to reduce its use in financial transactions.
This is expected to help decrease the cost of business and improve revenue-collection measures, with the government seeking to meet its goals by enabling the digital payment of utility bills such as electricity and water, as well as supporting the development of a series of digital payment methods.