Mobile money holds huge potential for Ghana

Mobile money started off in Ghana tottering on the brink of little hope it will gain popularity among the public. While the promoters, mainly the mobile telecom operators, touted its potential, especially drawing on Kenya’s huge success story with the service, critics maintained that the geo-economic and demographic differences between the two countries were poles apart for Kenya’s succes to be replicated in Ghana.

That notwithstanding, mobile money started with Airtel’s (then Zain) launch of Zap in February 2009 and later followed by MTN in the same year. As of 2012, the transaction value of Mobile money was GH¢171million.
Fast forward to today, not even the most avowed doomsday prophet will stand by his words - as there are now 21,721,814  number of wallet holders with GH¢11.6 billion value of transactions  carried out - the landscape has changed and the perceived bleak future of mobile money has given way to a bright and prospective story of hope, unspeakable success and more room for improvement.

Mobile money gather momentum
Patronage of mobile money continues to gain momentum, as the value of transactions for the third year running saw an astronomical jump, from GH¢2.4 billion as of 2013 to about GH¢11.6 billion in 2014, according to the Bank of Ghana (BoG). This means the number of transactions has almost quadrupled since 2012; from 30 million to about 106.4 million in 2014.
Registered mobile money customers have also increased from 3,303,837 in 2013 to 5,424,650 in 2014, representing a 64- per cent increase, while the total number of subscribers also increased from 20,346,016 in 2013 to 21,721,814 in 2014.
The Head, Research and Communications at the Ghana Telecoms Chamber, Mr Derek B. Laryea, said mobile money holds huge potential for the country, especially should the current trend continue. 

The service, he said, had already proven to be viable and sustainable, as awareness had increased and additional payment options now being developed by the day.

Growth in the service is expected to contribute to economic growth because it offered convenience and consumer protection, while lowering the risks inherent in the informal economy and widespread use of cash.
Mr Laryea, speaking in an interview with the GRAPHIC BUSINESS, said mobile money would also act as a catalyst for formalising the economy and enable the government to have a broader view of transactions.

Mobile money not replacing banking
Although the mobile money revolution has been a little litargic in Ghana compared to Kenya, the former’s approach was to make the mobile operators carry their transactions on banking platforms (within the banking sector). In the case of Kenya, the telecom companies had the liberty to create wallets on their platforms and only partner with banks by choice.
It is only recently that the BoG issued new user guidelines which give the mobile money outfits of the various telecom companies some autonomy from their banking partners.

Under the new guidelines, the mobile money operators would be required to go for new licences that would make them independent financial institutions rather than just departments of the respective telcos.
The mobile money licences which were issued to banks to partner with the telecom companies will now be issued directly to the mobile money operators, and they will use the banks only as deposit agencies.
The mobile money brands will become separate financial institutions registered under different names but still owned by the respective telecom companies.

A banking consultant, Nana Otuo Acheampong, also in an a separate interview, said mobile money was filling the gaps in the banking sector but not replacing banking.

“It will be economically suicidal for any bank to open a branch in a community of about 500 people whose major source of income is farming. Mobile money has, therefore, come to provide people in such communities a platform to send and receive money,” he stated.

He believed this was why people living in especially the rural areas had embraced the transfer of money through mobile networks since it was introduced in 2009.

He said mobile money had helped people living in urban areas to transfer funds to friends and families with ease within and outside their communities.

Mr Laryea, commenting on this, said mobile money was complementing banking and not competing with banking.
“Banks will continue to be banks while telcos will play their role as telecom companies. Thanks to the rigorous supervision of the regulator and the new Electronic Money Issuers (EMI) and Agent Guidelines, both sectors can play their respective roles and complement each other”, he stated.

Mr Laryea said banks, however, still had a major role to play while the mobile money industry also had its role in the Ghanaian economy.

He believed there was enough room for both to co-exist as banks generally relied on traditional ‘brick & mortar’ infrastructure which creates a struggle to serve low-income customers profitably, particularly in rural areas.
“Mobile money can be seen as a cheaper option of expanding traditional banking to the unbanked using devices that are already in the hands of consumers”, he stated.