The utilisation of mobile money in Ghana has become so ubiquitous the average Nigerian who visits would marvel at its pervasiveness in everyday life. To the Ghanaian, however, it no longer has a wow effect as it is just a part of daily life.
From purchasing treasury bills, Initial Public Offerings (IPOs), health insurance, to even the basic money transfers and digital service payments, mobile money in Ghana has gone beyond just achieving financial inclusion. It has also immensely redefined consumerism and flow of money within the $47-billion economy.
At the end of 2017, mobile money transactions in the country hit $32 billion, according to data from the Bank of Ghana, representing 68 percent of the country’s GDP.
Users not only get to deposit and withdraw via mobile money, but there is also provision for interest accruals, between 1.5 percent and 7 percent, as approved by Ghana’s central bank and subject to whatever each telecommunications company can negotiate with each partner bank.
Currently, three telecommunications companies (AirtelTigo, MTN, and Vodafone) facilitate mobile money in Ghana.
The mobile money system is bridging the gap between the banked and the under-banked population while providing convenience in transactions.
Interactions during a recent visit by BusinessDay to the country showed mobile money has literally been a lifesaver for many Ghanaians, enabling them to make urgent or even scheduled payments in situations where cash was not available.
“I don’t know how to express this, but if not for mobile money, my son would have died,” said Obed Addo, an artist who does portrait paintings and landscapes.
Addo told BusinessDay that his five-year-old son, Bethel, took ill sometime in 2016, and he believed the ailment would have claimed his son’s life if urgent medical care had not been provided.
The hospital required him to pay GH¢550 ($113) before his son would be admitted for treatment, since at that time he was yet to register for health insurance.
He was, however, broke and all he could scrap together was GH¢220 ($45). His saving grace was his sister, who transferred the balance of GH¢330 ($68) to him via mobile money.
“When I told my sister I had money but not much, she used mobile money and within seconds, I got the money, and there are agents everywhere, which made withdrawal easy. One, two steps and you find a mobile money agent to facilitate a withdrawal,” Addo said with excitement on his face as he recalled the incident.
“It is because of this mobile money and how fast it comes that my son is still alive. You know, in our hospitals if you don’t pay you won’t be attended to,” he said.
Addo said he did not understand all the medical terms spoken by the doctors, hence he was unable to recall what exactly the ailment was. All he knew was that his son was very sick and needed urgent treatment.
Isaac Norteye, a 22-year-old shop attendant in Osu, Accra’s business district, was once stranded at the marina mall late at night with no ‘Tro Tro’ buses available. He needed to take a taxi to Osu area where he lives but did not have enough cash on him. He asked the driver if he had registered mobile money on his line. When the driver responded in the affirmative, Norteye requested to pay using mobile money.
This was yet another demonstration of how mobile money could be used to pay for even the seemingly smallest transaction where cash is completely unavailable. However, as this reporter would find out when attempting to replicate the same thing, not all drivers have registered for mobile money, and they are part of less than 5 million Ghanaians who are yet to do so.
Ghana has 23.9 million registered mobile money accounts out of an estimated 28 million population. This is almost double the number of bank accounts, which was 12.5 million in 2017.
Despite this, banks do not appear to consider the mobile money system as a threat. The financial service providers have buy-ins structured into the operation of the mobile money system, which invariably makes it beneficial to them, even though pessimists will opine it is denying them of cash flow.
Ghana’s central bank in a 2017 report even alluded that “the growth in mobile money emanated from productive collaboration between mobile money operators and banks”.
Volume of transactions soared from 266.2 million in 2015 to 550.2 million in 2016, and the growth continued in 2017 with a 78.4 percent increase to 981.5 million transactions. Similar growth has been occurring in value of mobile money transactions, from GH¢35.4 billion in 2015 to GH¢78.5 billion in 2016, and then a 98.51 percent growth to GH¢155.8 ($32 billion) in 2017.
A boost to everyday life, business
Ebenezer Tetteh manages his father’s four boats at the Albert Bosomtwi-Sam fishing harbour in Sekondi. Tetteh said he been using mobile money on his AirtelTigo line for more than five years, and it has made managing his father’s business easier.
“Since mobile money came, we have been able to transact a lot of businesses without carrying money around. Sometimes fishing materials are needed from Accra, the capital city, so we talk to the seller, he hands over to a driver who assures you it is with him, you send the money, and they bring your goods. This is unlike before when you had to physically go and make purchases yourself,” said Tetteh.
He explained that because there is no bank located near the fishing harbour, bankers sometimes came around to look for customers. However, he said, people no longer grant audience to the bankers because of an incidence of microfinance fraud; they would rather go to Takoradi and deposit their money with established banks.
“When the boats come ashore and we discharge the fish to sell, I simply walk to the mobile money agent in the harbour and deposit the money I receive. So, when I’m walking around, you don’t see anything on me. All my money is in the phone, and nobody can come and cross me because he thinks I’m carrying cash,” said Tetteh with a wry smile on his face, suggesting he feels mobile money helps him outsmart potential thieves.
“If you take my phone, you get nothing because you don’t know my PIN,” he added.
Alex Dankwa, a mobile money agent for four years, said at first he sold only airtime and other things but made just little profit. The mobile money business has, however, increased his profit and improved his standard of living.
“Instead of taking a car to the bank and staying on a queue to send money, the mobile money has eliminated that,” Dankwa said, explaining, however, that he did not think the mobile money operation was a threat to the banks.
“The mobile money is linked to banks. As for us agents, we have to visit a bank before we can get eCash for our phone. If you don’t go to the bank, you won’t get it, so the banks are also benefitting from it,” he said.
Most businesses accept mobile money when customers want to make payments to them. The ease of collection and even withdrawal, they said, has made operations easier for them.
Before the advent of mobile money, Addo, the painter, recalled that after chatting with potential clients on phone and getting commissioned to make a painting, he still had to physically meet the clients for payment.
“The client wants to pay but he doesn’t have time because of work, unless you take a car and go there, and with traffic too, it delays the work and puts pressure on you. But because of mobile money, he/she can stay in his office and just send the money in the blink of an eye, and this makes the work easier,” Addo explained.
Nana Ahemaa, a small business owner seen making cocktails at a street fair, said mobile money was making business easier and helping with collections.
“Sometimes when people come to make a purchase, they say they don’t have enough money on them and ask if I take mobile money. I say yes, I take mobile money. So I think it is making business and collection much easier,” said Ahemaa, who has not contemplated using a POS.
Norteye, the shop attendant who had once been saved by mobile money when he got stranded, also said it is accepted for payment at the business he works for.
“If someone sees a product and it attracts him but he doesn’t have cash but has it in the mobile money, I can give him our number and he sends the money,” Norteye said.
The number belongs to the owner of the business, and since the phone is not with Norteye as a store attendant, verification is done via a phone call and the sale is concluded.
Mobile money maintains exponential growth
The mobile money ecosystem in Ghana has continued to grow since the passage of the Electronic Money Issuers and Agents Guidelines in July 2015, according to Ghana’s central bank. The number of registered mobile money accounts as at December 2017, at 23,947,437, represents a 21.34 percent growth rate over the 2016 position of 19,735,098. Similarly, the number of active mobile money accounts increased by 33.75 percent, from 8,313,283 in 2016 to 11,119,376 in 2017.
The number of active registered agents of the three mobile money operators (MMOs) in 2017 stood at 151,745, up from 107,415 the previous year, showing a growth rate of 41.27 percent.
The Central Bank of Ghana also noted that mobile money financial services experienced exponential growth as compared to other non-cash payment streams. This, it said, was on account of expansion in agent network and introduction of innovative products. The growth in mobile money emanated from productive collaboration between mobile money operators and banks.
While cheques continued to be the major non-cash retail payment instrument in terms of value of transactions, value of cheques cleared as a percentage of total value of non-cash retail payments dropped from 60.21 percent in 2016 to 49.33 percent, while value of mobile money grew from 31.02 percent in 2016 to 42.81 percent in 2017. The volume of mobile money transactions represented 97.50 percent of total volume of non-cash retail payments.
However, in terms of value of transactions undertaken in 2017, cheques continued to maintain the lead with GH¢179.6 billion ($36 billion), while mobile money followed closely with GH¢155.8 billion ($32 billion).
MTN, which was the first telco to launch mobile money in Ghana, also made its Initial Public Offering available via mobile money, described by the company in a December 2018 publication as “the 1st IPO in the world to use mobile money as a medium to subscribe shares”.
The 2017 State of the Industry Report on Mobile Money by GSMA also noted that the “2015 regulatory guidelines from the Bank of Ghana have allowed customers to accrue interest on mobile money deposits, resulting in exponential growth in total deposits in that market”. It said “mobile money customers can also purchase treasury bills through their devices, thanks to a collaboration between Ecobank and MTN Ghana”.
Certain charges are attached to different levels of cash withdrawals, BusinessDay observed. In an AirtelTigo shop, a notice showed withdrawal between GH¢1-50 attracts a charge of GH¢0.50, GH¢50.1 to GH¢1,000 attracts 1 percent charge, and withdrawal above GH¢1,000 attract GH¢10.
This, for a Nigerian, would have been discouraging as it exceeds the N52.50 for an inter-bank transfer. For the Ghanaians, however, this appeared to be a non-issue.
For instance, a GH¢50 (N3,719) withdrawal will attract a fee of 50 pesewas, equivalent to N37. Above GH¢1,000, the fee becomes GH¢10, equivalent to N743, which is 14 times more than the N52.50 a Nigerian bank customer pays to transfer as much as N2 million (GH¢26,000) in a day, depending on the bank.
Still, the average Ghanaian appears unperturbed on the withdrawal and (some) transfer fees, because as far as they are concerned, the convenience is worth the price. People who have to make payment to businesses through mobile money also know they have to add the requisite withdrawal charges for the recipient to ensure the person/business being paid withdraws the exact amount.
So far, security risks for mobile agents appear to be less of a concern, but incidents of attack are not entirely non-existent. At the Sekondi Harbour, Tetteh explained that sometimes when business closes, he has to either pick a motor and go drop off the lady doing mobile money, “or when her husband is around, he has a car so picks her up”, adding, “So far there has been no incident of attack or theft.”
Other sources corroborate the accounts of relative safety, but occasionally, mobile money agents fall prey to attacks. Still, Nigeria has much to learn from the hugely successful system in Ghana.
CALEB OJEWALE
