Ghana introduces new financial inclusion policies, catalyst for growth
As the world continues to grapple with the deadly coronavirus and slowly rounds the bend to post-pandemic days, it will behoove governments, regulatory agencies, and other sectoral players to drive the rapid digitization of their economies. This calls for actionable policies and regulatory frameworks, backed by dedication and pragmatic follow-through on implementation each step of the way.
In 2019, the World Bank acknowledged Ghana as the fastest-growing mobile money market in Africa and offered key recommendations to enhance financial inclusion: (1) digitizing government to person (G2P) payments, (2) promoting agent banking for the last mile, (3) linking informal financial channels with formal financial services, (4) improving financial capabilities for consumers, and (5) leveraging data to improve access to finance.
In May 2020, the Ministry of Finance launched three policy initiatives to deepen financial inclusion and accelerate digital transformation: the National Financial Inclusion and Development Strategy, the Digital Financial Services Policy, and the Cash-Lite Roadmap. These policies will undoubtedly improve Ghana’s digital financial landscape, furthering progress made over the past decade while guiding the creation of a cash-lite economy, which has become essential in the era of COVID-19.
1. The National Financial Inclusion and Development Strategy, developed in partnership with the World Bank, aims to push financial inclusion from 58% at present to 85% by 2023, provide economic opportunities, and reduce poverty. This is an incredible target that will reduce the financial inclusion gap, increase financial access points, account ownership, and the uptake of financial products across the country. This strategy seeks to address the fundamental barriers preventing Ghana’s unserved, underserved, and most vulnerable populations from accessing financial products and services that would enable them to generate income, build assets, manage financial risks, and become economically empowered.
A key pillar of this strategy is a call for service providers to build customers’ financial capabilities. As digitization has become the new normal, service providers will have to lead the provision of digital financial curriculums and initiatives for the populace. For instance, SIA, under the USAID Women’s Global Development and Prosperity Initiative, recently developed 11 digital literacy lessons to be disseminated via interactive voice recall.
2. The Digital Financial Services Policy, in cooperation with the Consultative Group to Assist the Poor (CGAP), is designed to support a resilient, inclusive, and innovative digital ecosystem that contributes to social development, economic prosperity, and private sector progress. The policy instituted a four-year (2020-2023) blueprint for achieving short- and medium-term progress in six areas: (1)improving governance of the digital financial services (DFS) ecosystem, (2) supporting fintech, (3) creating an enabling regulatory framework, (4) actively building the capacity of authorities to supervise the space, (5) supporting the development of market infrastructure for DFS, and (6) driving the expansion of DFS (including payments, savings, credits, and insurance).
Expanding DFS is going to be critical if the government wants to achieve an inclusive digital ecosystem. Payments made to government agencies and by government to individuals and businesses ought to be digitized to unlock leakages, cash handling, and the needed revenue collection.
The recent onboarding of Mr. Kwame Oppong as the Head of the newly formed FinTech unit at Bank of Ghana is a clear indication that the FinTech industry has been granted broader acceptance and participation in the country’s digital finance ecosystem. Zeepay is the first fintech company to receive the Electronic Money Issuer (EMI) license to operate as a mobile financial services company by the Bank of Ghana, the regulator of banking and financial services. As a leading Ghanaian-owned fintech company, Zeepay offers services that enable subscribers to utilize a complete set of mobile money services such as cash-in/cash-out, peer-to-peer (P2P) transfers, micro Insurance, remittances, airtime top-up, bill payment, and pension collections — all in partnership with third parties such as insurance companies, banks, and pension trustees amongst others extending its suite of services.
3. The Cash-Lite Roadmap, in collaboration with the Better Than Cash Alliance, pinpoints concrete steps to building an inclusive digital payment ecosystem. This includes improving access to financial services, enabling regulation and oversight, and promoting consumer protection. The roadmap is designed to chart the pathway to a more vibrant and inclusive digital ecosystem that is both pervasive and transformational, capable of supporting and complementing the electronic transformation initiative, providing Ghanaians with financial tools tailored to suit their needs, while propelling Ghana into a model digitized financial hub.
The growth of digital payments in Ghana, though small by international standards, has been made possible by several intrinsic strengths in the payment system as well as evolving developments that present opportunities for accelerated growth in the digitization process. The country has built critical foundational financial market and payments infrastructure to aid its transformation into a cashless economy, including an automated clearing house (ACH), a real-time gross settlement system (RTGS), electronic funds transfer (EFT), a central securities depository with a trading platform, and ATM interoperability. Recently, the government launched an interoperable switch that facilitates payments across financial institutions and mobile money accounts in real time.
Digital payments provide a range of cross-cutting benefits to consumers, not limited to greater time savings, convenience, and security. Firms on the other side can view dashboards that uniquely display an audit trail of recipients, disbursement time, and the amount, reducing administrative burdens on the back end.
For the government, the broad objective behind digitizing payments is to leverage the efficiencies to save costs in operations and to increase the collection of government revenues. It is, therefore, necessary to make digital payments a ubiquitous part of the lives of all Ghanaians in such a way that attracts the financially included to transact through digital means and onboards the excluded and underserved into the formal financial system.
Ghana has made — and continues to make — positive strides toward digitizing its economy. Progress is being made in diverse ways. Obvious advancements include the introduction of digital initiatives such as official digital addressing systems – Ghana Post GPS, a biometric national identity card issued to both resident and non-resident Ghanaians, and legally and permanent resident foreign nationals; digitizing government to person (G2P) and person to government (P2G) payments; mobile money interoperability; and Africa’s first interoperable payment acceptance solution, known as universal QR codes.
Creating financial access options, i.e., self-registration for financial accounts and naming of streets, are typical examples of what the National ID and digital Ghana Post GPS has achieved. Thanks to service providers like AirtelTigo, Ecobank, MTN, and Pan African Microfinance, app-based, WhatsApp, and USSD functionalities have been enabled to allow customers to onboard and access basic financial transactions.
DFS professionals, fintech, financial players, private and public individuals are eager to see these policies come into play, and so is our team at SIA. In the coming months, we at SIA and or these other partners mentioned would engage and document progress as we safely navigate out of COVID-19.