For nearly three decades, the Ghanaian economy has been steadily growing, as a result of an increasingly competitive business environment and decreasing poverty levels. The country’s GDP is expected to expand by 6.8 percent in 2018 and 6.2 percent in 2019, and its credit rating was recently upgraded from ‘B-‘ to ‘B’ due to improved monetary policy effectiveness and banking sector stability.
In correlation with this growth, Ghana’s state of financial inclusion has been improving; between 2011 and 2017, the percentage of Ghanaian adults with access to formal financial services increased from 29 percent to 58 percent.
Despite this remarkable growth, there are still seven million unbanked Ghanaians, with the most significant deterrents being the ease of access to financial services, insufficient funds and high costs associated with managing an account. Through a variety of methods and initiatives, Ghana has attempted to, and in some cases, succeeded, in addressing these factors.
The problem of accessibility for Ghana’s rural population (45.6% of the general population) has been eased through a predominantly non-bank formal financial services approach. Mobile money has been one of the most critical drivers of financial inclusion in Ghana — 81 percent of the population living in extreme poverty (below $2.50 per day) have mobile money accounts.
By 2017, over 11 million Ghanaians (38% of the total population) had active mobile money accounts; and they now record a volume of $82 million monthly mobile money transactions with 151,000 Mobile Money agents. It is now regarded as one of the most successful and fastest growing mobile money markets in sub-Saharan Africa.
The high-cost factor was addressed in May 2018, with the country’s first Mobile Money Interoperability System. Launched in May 2018 by the Bank of Ghana (BoG), this is a single system through which all mobile network providers can operate, in order for consumers to easily transfer funds from one mobile money wallet to another. Thus, costs are reduced, as customers no longer require the services of third party payment providers to initiate transfers across networks.
In 2009, Ghana launched a national strategy for financial literacy and consumer education in the microfinance sector, with the ultimate goal of establishing behavioural changes in consumers and service providers. This was followed by the development of a more holistic financial inclusion strategy, designed to harness the benefits of digital developments by creating a nationally inclusive digital payments ecosystem. Ghana’s foundational focus on building literacy and their ability to leverage the resources at their disposal in alignment with the unique characteristics and needs of their unbanked population is evidently a core aspect of their strategy, and one that has exponentially enhanced their potential for continued success.
Another critical success factor is Ghana’s harnessing of potential of partnerships in catering to the financial service needs of the banked and unbanked. As the Global Lead of the Inclusive Markets Team of the Consultative Group to Assist the Poor (CGAP) – Stephen Rasmussen – said: “It’s not that banks are going to solve the problems by themselves or mobile money or fintechs, it’s rather going to be partnerships across that [do]…” Digital Financial Service (DFS) providers (banks, telecommunications companies and fintechs), work in partnership with more than 27 commercial banks, 60 nonbank financial institutions (NBFIs), 138 rural and community banks, 503 licensed MFIs and hundreds of licensed individual susu collectors in the country.
Ghana’s efforts are certainly laudable, but there are still strides to be made.
There is no indication of any particular initiatives driven towards addressing the problem of insufficient funds, and a potential rise in the number of passive accounts. In addition, the full range of financial services aren’t being adopted by the country’s newly included citizens — the Ghanaian mobile money market is still almost entirely about cash-in/cash-out transactions, remittances and airtime top-ups. Only 7 percent of active mobile money account holders save through their mobile money accounts, and only 0.5 percent has taken a loan. They also have the highest number of unregistered mobile money users, with two-thirds of active account owners/users making predominantly cash transactions or using other people’s accounts.
Nevertheless, Nigeria’s success in its efforts to establish a completely financially-inclusive society will be greatly helped by its ability to learn from these identified problem areas for improvement. More importantly, there are critical lessons for Nigeria to learn in order to emulate the winning approaches — continuously enhancing and tailoring our financial inclusion strategy to the evolving needs of various segments of the population; leveraging on mobile and digital technology to address the challenges of including hard-to-reach individuals in the financial system; and certainly, making a greater effort to combine cross-industry expertise and resources — all for the ultimate gain of the citizen.
Usoro Usoro is the General Manager of Mobile Financial Services at MTN Nigeria.
Tags: financial inclusion
, mobile money