Ghana's banks close ranks against telcos

Local financial institutions wary of telecommunication service providers growing interest in offering financial services.

Bankers in Ghana are demanding a review of the provision of financial services by telecommunication service providers.

Banking industry consultant Nana Otuo Acheampong says the revision is necessary to guide the sector as new technologies emerge.

Managing Director of CAL Bank, Frank Adu Jr, noted that a clear policy is required to determine the extent to which local telcos can roll out financial products and engage with customers on solution choice.

The industry insiders both reference a recent attempt by one of the country's six telcos to offer loan services to mobile users, and describe the move as being contrary to the Central Bank's E-money Issuers Guidelines and not a part of any financial inclusion drive.

Though no telco was mentioned, Airtel Ghana this month partnered with Fidelity Bank and Tiaxa which offers Nano credits to launch Airtel Money Bosea – a Nano loan scheme that enables users to borrow money instantly through their Airtel Money wallet anytime, anywhere.

Acheampong argued that the guidelines require telcos to establish a separate business entity to handle their electronic money services.

The guidelines state that "electronic money is only provided by (a) financial institutions regulated under the Banking Act, 2004 (Act 673); or (b) duly licenced non-bank entities which are engaged solely in the business of e-money and activities related or incidental to the business of e-money, and which are regulated and supervised by the Bank of Ghana."

Acheampong, who also heads the Osei Tutu II Centre for Executive Education and Research, added that the regulation telcos currently have covers the payment system, under the payment system Act of 2003, and not offering loans, which represents a new territory.

Adu Jr says the loan offer in question will allow users to borrow money from a telco at a monthly interest rate of 20% or 240% per annum.

According to the 2015 CGAP-funded Financial Inclusion Insights Survey in Ghana, one in five Ghanaians has a registered mobile money account though half of them also have a registered bank account.

There are four mobile-money service providers (MTN Mobile Money, Airtel Money, Vodafone and Tigo Cash).

Total value of mobile money transactions rose from GH¢2.6 billion in 2013 to GH¢35.4 billion according to data from the central bank.