The current growth in financial technology (fintech) and its promise to democratize financial services in Ghana is heavily depended on the country’s mobile money (MoMo) payments sector.
This mobile payments sector which began in Ghana by Scancom Plc, operators of MTN Ghana in 2009, now boasts of over 32.6 million users, with competitors such as Vodafone Cash, and AirtelTigo Money.
MTN Mobile Money, a subsidiary of MTN Ghana which is the first to launch mobile money operations on July 21st 2009 is celebrating its 10th anniversary in the West African country.
Launched with two main services namely Money Transfer and Airtime Purchase, the platform has six major categories of financial transactions under which varying services are provided. These are pensions, insurance, Savings, micro loans, international remittances and banking options.
Almost all the products and services of fintechs in the country are powered by MoMo payment systems. So, they can’t survive without them, industry experts said.
Commenting on how MoMo has aided the growth and sustainability of fintechs in Ghana, Jacob Kwaku Gyan, analyst of the fintech industry said: “With the direction Ghana is going it will be difficult for fintechs to survive without MoMo”.
Relationship between fintechs and MoMo providers
Therefore he said the relationship between fintechs and MoMo providers “has to be intertwined because with fintechs, you are looking at financial inclusion through technology and if a lot people especially the unbanked are on the mobile money platforms, then definitely you can’t take mobile money out of fintechs”.
When asked who benefits from the relationship, Mr Gyan who is also the Chief Executive Officer of Adroit 360, a Ghanaian software development and website designing startup, said everybody benefits.
He used the opportunity to appeal to MoMo providers and the fintechs to reduce their charges. In his words: “I have seen some fintechs with quite high charges especially on international transactions, where people can send money directly to mobile money numbers of recipients”.
This relationship could only be enhanced if the government makes sure that there are right licenses, and also ensuring that customers are protected from fraudsters, Mr Gyan told African Eye Report.
Alva Nii Ayitey-Adjin, Communications Officer at Emergent Payments Ghana Limited, a local payments provider, added: “The rise of mobile money has resulted in an increase in the number of fintechs bridging the gap between informal and formal savings”.
The use of mobile money has grown exponentially within 10 years, making Ghana one of the Africa’s leaders in mobile money innovation, adoption, and usage.
According to figures from the Bank of Ghana (BoG), mobile money accounts now surpass bank accounts and greater financial inclusion has benefited large swathes of the population that remain unbanked including the poor, the young, and women.
While access to traditional banking services remains almost a mirage for most Ghanaians, the universal availability of mobile phones has allowed millions to access mobile money services in the country.
Most Ghanaian users now rely on mobile payments to send and receive money domestically. Recently, they are taking advantage of new services to also send and receive money internationally.
For instance, MTN Mobile Money which dominates over 85 percent of the country’s mobile money market, a week ago revealed that a total of GHS 2.19 billion received by MoMo customers into their MoMo wallet from abroad over the past 12 months.
In addition, they use mobile money to pay their utility bills, receive their wages, and pay for goods and services, pensions, insurance, Savings, micro loans, and banking services.
Innovation and investment into the space by EMIs
For Madam Buddy Buruku, a digital financial services (DFS) adviser of a World Bank’s Consultative Group to Assist the Poor (CGAP), based in Ghana, innovation and investment into the space by e-money issuers (EMIs) and fintech has led to a robust ecosystem in the country.
She added that the regulatory environment has promoted growth and should continue to do so if the government could play a significant role in setting the pace for DFS proliferation as a tool for financial inclusion.
Expedite action on the digitation of the P2G
The General Manager of Mobile Financial Services at MTN Ghana, Eli Hini, called on the government to expedite action on the digitation of the person-to-government (P2G) payment space to increase the efficiency of collections/payments in the country.
He also asked the government to support initiatives to digitize of agric, health and other value chains to speed up the country’s journey to cash-light economy.
Fintech solutions do not only revolve around digitizing money but also help economies monetize data. Accurate data and information help businesses improve their human capital which is needed for them to achieve goals and remain innovative.
With the help of technology, financial service providers and businesses are able to draw insights into consumer behaviors and market trends based on deep learning.
Innovative financial services have the potential to extend financial advice deduced from insights to consumers in order for them to make more informed financial decisions.
Amadou N. R. Sy, an Advisor in the African Department of the IMF working on macro-financial sector issues stressed that Africa including Ghana is well positioned to meet its fintech and digital challenges, and with the right policies in place, it could reap a “digital dividend.”
But first, policymakers need to address the existing large infrastructure gap in the region, starting with electricity and internet services.
Secondly, Africa will need to balance the perennial demands of fast-moving innovation against the slower pace of regulation. Good regulation is needed but stifling innovation would be costly, according to him.
This article was facilitated by Journalists for Business Advocacy (JBA), Ghana.
Source: Masahudu Ankiilu Kunateh || African Eye Report