As operators have looked to diversify product offerings in recent years, they have shown increasing interest in mobile banking and mobile money. Mobile money has become a way in which technology can allow frontier markets to reduce development disparities and improve financial inclusion. The most successful illustration of this is the M-Pesa programme in Kenya, which initially began in 2007 and now processes transactions, that by some estimates, account for as much as one-third of the country’s total GDP. However, that sort of growth has been difficult to replicate elsewhere – even in other countries using the M-Pesa programme – and Ghana is no exception. Less than one-quarter of the adult population currently has an active mobile money account.
Nevertheless, the push for a cash-lite economy by the Bank of Ghana (BoG), in which the use of cash for transactions is reduced and financial inclusion encouraged, means that it is now taking a more positive view of the segment. Mobile money is particularly popular for handling remittances sent from abroad, an important component of the Ghanaian economy.
Surging Growth
Importantly, while the overall figure is still low, the number of Ghanaian adults with active mobile money accounts has grown significantly, doubling in 2015 to reach 17% by the end of the year, according to the World Bank. The Consultative Group to Assist the Poor (CGAP), a global partnership of 34 leading organisations that seeks to advance financial inclusion, noted that the growth is particularly impressive given that mobile money was only introduced in Ghana in 2009.
The value of mobile money transactions rose to GHS30bn ($7.7bn) in the first half of 2016, close to the GHS35bn ($9bn) achieved throughout 2015, according to the Ghana Chamber of Telecommunications (GCT). This has increased from just GHS1.7bn ($438.6m) in 2012 to GHS2.4bn ($619.2m) in 2013 and GHS11.6bn ($3bn) in 2014, according to the BoG.
Revenue Booster
In 2015 mobile money contributed 6% to MTN Ghana’s total revenue of GHS2.23bn ($575.3m). The company had around 6.2m users and a network of 35,000 mobile-money merchants as of September 2016, with plans to increase the number to boost coverage. In March 2016 MTN announced plans to work with partner banks to develop means of paying users interest on cash in their e-wallets.
Despite being one of the smaller operators on the market, Tigo recorded 35m transactions through its Tigo Cash service in 2015, over four times the 8m it achieved in 2014. The operator has more than 12,000 merchants, and is now averaging more than 3m transactions per month. Tigo Cash was launched in 2011 and can be used for a range of payments.
In May 2016 Airtel Ghana announced a partnership with Fidelity Bank and nano-credit provider Tiaxa to launch a small loan service, Airtel Money Bosea. The new service will allow eligible customers to borrow as much as GHS200 ($51.60), which can be paid back up to one month later through Airtel Money wallets.
In addition to the mobile operators themselves, home-grown companies like Afric Xpress and eTranzact Ghana are also active in the market.
Opportunities
Despite the fledgling nature of the segment, the CGAP said that Ghana was “the most digital-financial-services-ready country in Africa”, estimating that 92% of adults had the ID required to open a mobile money account and 91% had a mobile phone. “Mobile money is growing at a phenomenal rate, with the volume and value of transactions increasing several-fold,” Kwaku Sakyi-Addo, CEO of the GCT, told OBG. “Still, there is more room for growth in mobile money in areas such as salaries, school fees, port fees, Customs payments and other charges. We expect that Ghana will leapfrog from cash directly to mobile money, bypassing credit cards, which are not widespread here. The segment will continue to grow, and in the end, improve Ghana’s purchasing power.”
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