Mobile Money: MTN courts banks' support
The Chief Executive Officer of MTN Ghana, Ebenezer Asante, has downplayed assertions that mobile telecoms companies are in a fierce competition with financial institutions following passage of a set of guidelines that authorises them to set up separate institutions to handle their mobile money operations.
The E-Money Issuers Guidelines, released by the Bank of Ghana last month, gave the telecom companies up to six months to set up separate entities for handling their mobile money businesses.
The new framework, which will see telcos -- boosted by the widespread visibility -- engage in mobilisation of depositors' funds, was said to have caused uneasy tension among the banks who fear the telcos will encroach on their space.
The objectives of the latest guidelines, the Bank of Ghana said, is to “ensure that electronic money is only provided by (a) financial institutions regulated under the Banking Act, 2004 (Act 673); or (b) duly licenced non-bank entities which are engaged solely in the business of e-money and activities related or incidental to the business of e-money, and which are regulated and supervised by the Bank of Ghana”.
But speaking at a mobile money stakeholder workshop on the theme ‘The potential of mobile money to drive financial inclusion in Ghana’, Mr. Asante said: “The reason I still insist we are in no competition is because there is so much for us to do. Even some of the innovations that we talked about are just the minimum; because in Rwanda, where I’m coming from, even today taxes are paid through mobile money”.
Mr. Asante, former CEO of MTN Rwanda, said there’s a lot the Ghanaian market can learn from the East African country.
“At the end of the day we also facilitate the whole financial inclusion process. For instance, everything that you do in Rwanda today can be done with mobile money, whether you want to pay your government permit, land permit etc.
“So when you look at it from the long-term perspective, I think there is more for us to benefit from cooperation than competition. We have to think about a collaboration that will churn out innovation. So for the bankers, it is very important for us to collaborate and expand the space of mobile wallet services,” he said.
Collaboration between the banks and the telcos, Mr. Asante said, will enable the two to mop-up excess liquidity in the system. “Today in Rwanda every single ATM card directly leads to your mobile money wallet, so you can just use your ATM card to withdraw money from your mobile money wallet.
“So when we ensure the ecosystem’s total collaboration, the banks will benefit. The monies that we are mobilising from the rural areas onto the mobile money wallet -- which in future we will start paying interest on -- will now become available for the banks also to lend-on; and in the long-term, can also help with saving, and the mobilisation, investment and reduction of interest rates etc,” he added.
Mobile money and financial inclusion
Financial inclusion in Ghana has now reached 16 percent as at last year, whereas access to banks rose to 9 percent and mobile money access from 7 percent to 20 percent between 2010 and 2014.
The patronage of mobile money continues to gain momentum, as for the third year running value of transactions saw an astronomical jump -- from GH¢2.4billion as at 2013 to about GH¢11.6billion in 2014, according to the central bank.
The value of mobile money transactions when put into perspective is more than a third of the total deposit liabilities of the 28 banks as at the end of last year, and shows the vital role telecom companies are playing to advance the central bank’s cashlite economy agenda -- and also to ensure that the push for more financial inclusion is brought into the hands of millions of Ghanaians.