Financial Inclusion in Ghana’s Digital Economy

This week at Songhai Advisory, we look forward to hosting a roundtable on The Outlook for the Five Pillars of Ghana’s Digital Economy where we’ll be discussing what the key drivers are for the momentum we’re witnessing and experiencing on the ground in tech and where we see real opportunities for growth in West Africa’s second largest economy. In this piece, we’ve highlighted what some of the key drivers are for financial services within digital tech.

Government driving digital agenda.

The government of Ghana’s proactive stance in promoting the digital economy through the adoption of a National Financial Inclusion Strategy (2018-2023) and a Digital Financial Services Policy (2020) has put the digital economy front and centre of decision-making. Presently, Ghana’s internet penetration rate is at 46.5%, putting it ahead of the regional average of 39%, yet there are significant urban-rural and gender divides. By 2030, government plans for there to be universal access to the digital economy and the automation of government processes (for instance, the registration of companies and the renewal of passports online) or the creation of an office for fintech and innovation at the Bank of Ghana last year are steps in that direction.

High mobile phone usage.

Ghana has the highest mobile phone penetration rate in West Africa, at 55%, almost 10% higher than the rest of the region[1]. This has several implications for Ghanaians, from being financially included especially via mobile money (pls see below), to facilitating digital identity (e.g. birth registrations) and boosting healthcare access[2].

Ghana is the fastest growing mobile money market in Sub-Saharan Africa.[3]

As of January 2021, at least 40% of Ghanaians aged 15 years or older had mobile money accounts.[4]According to the Bank of Ghana, mobile money transactions increased by 110% between January and August 2020.[5]Dueto the pandemic, cashless payments became more popular as countries tried to control the spread of the virus. Most service providers for digital financial services, including MTN, also reduced fees for peer-to-peer (P2P) transactions to encourage the usage of their products.

Innovations in remittances.

Today, Ghanaians can receive remittances through Western Union straight to their MTN or AirtelTigo mobile money accounts.[6]Startups like FIDOare also developing disruptive solutions to enable individuals and small businesses to access credit easily in Ghana and Zeepay, a home-grown fintech which enables remittances from the Diaspora to go onto mobile wallets in Ghana and other markets across the continent, recently raised USD7.9m in Series A funding[7].  

Outlook - Close the Gap

While the future of digital financial services promises to be exciting in Ghana and the rest of Sub-Saharan Africa, there are still some challenges. Financial access in Ghana remains low among women, the poor and those in rural areas. Indeed, the World Bank notes that, “54% of women had an account with a formal financial institution, compared to 58% for the general population and 62% of men.” [8]The rise in cybercrime in the digital financial services and e-commerce industries is also concerning. At least 30% of cybercrimes in Sub-Saharan Africa are related to credit card fraud and phishing although credit card usage is low in Ghana, at only 15,000[9]. The automation of government processes isn’t always seamless- for instance, when it comes to company registration, the online process has limitations – data is not as comprehensive as the ‘old system’ we’ve been told at the registry. 

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*Photo by Rami Al-zayaton Unsplash

[1]https://www.gsma.com/mobilefordevelopment/blog/the-state-of-mobile-in-ghanas-tech-ecosystem/

[2]https://qz.com/africa/1860227/ghanas-mpharma-raises-17m-appoints-ex-cvs-boss-to-board/

[3]Ghana Economic Update: Enhancing Financial Inclusion

[4]Cellulant gets central bank license to launch Tingg in Ghana

[5]BoG data: Ghana's Mobile Money transactions up by 110 percent

[6]Western Union moves money directly into AirtelTigo Money wallets

[7]https://www.finextra.com/pressarticle/88366/ghanaian-fintech-zeepay-raises-79-million

[8]https://www.worldbank.org/en/country/ghana/publication/ghana-economic-update-enhancing-financial-inclusion

[9]https://thedocs.worldbank.org/en/doc/412821598381054828-0090022020/original/GhanaDE4ALOWRes.pdf