Mobile money overtakes banks as main driver of financial inclusion — WB report

The fourth Economic Update Report on Ghana published by the World Bank has shown that financial inclusion in the country is being and will be largely driven by mobile money platforms rather than banks.

According to the report, of the 17 percentage points increase in access to formal financial services between 2010 and 2015, mobile money alone accounted for 7 percent while banks contributed only 2 percent. Again, mobile money and other non-bank financial institutions contributed an additional 8 percent.

This essentially means that within the five-year period a lot more people are using mobile money platforms and other non-bank financial institutions to access financial services, such as paying bills, sending and receiving money among others, rather than the traditional method of using banks.

What has accounted for this change in paradigm, the report says, is the rapid penetration of mobile phones in the country. This has made Ghana the fastest-growing mobile money market in Africa. The total number of mobile voice subscriptions grew 39 percent from 25.6 to 37.4 million between 2012 and 2017, resulting in a six-fold increase in registered mobile money accounts between 2012 and 2017 – from 3.8 million to 23.9 million.

There is even greater opportunity for these statistics to get better, as mobile money customers and usage still remain significantly below mobile phone ownership; demonstrating that there is space for mobile money to contribute even more to financial inclusion.

Again, expansion of the agent distribution network contributed significantly to this success, as the number of active agents increased from 5,900 in 2012 to 151,745 in 2017. This expansion of agents, says the report, offered users more cash-in and cash-out opportunities and increased the overall convenience of using mobile money.

Banks, on the other hand, have recently contributed the least to increasing financial inclusion across the country, as a result of their lack of focus on offering financial solutions to everyday Ghanaians. They have instead focused on corporate banking and high net worth individuals, the report stated.

The World Bank has among its recommendations urged government to take the lead in expanding access to formal financial services using collection and payment of utility bills.

“While government to person payments are nearly all electronic, there are untapped opportunities for digitising government collections – the majority of which are still paid in cash. Similarly, digitising payments for electricity and water, which are almost exclusively still paid in cash, will bring significant convenience to millions of people, deepening financial inclusion further.

“Current approaches remain piece-meal, and clear direction from Government is needed to further push existing projects in these areas. To do so, financial and technical support to the Ministries, Departments, and Agencies (MDAs) and utilities is required to update their internal accounting systems.

“This would allow full integration via open application programme interfaces (APIs) into institutions such as GhIPSS, allowing for individuals to use their bank account or mobile wallets to pay for government services or utility bills,” the report said.