Cashless economy enhanced as Bawumia launches mobile money interoperability

Vice-President Dr Mahamudu Bawumia has charged financial institutions and telecommunication companies in the country to find innovative ways of turning mobile phones and the mobile money platform into vehicles of economic emancipation of the many players in the huge informal sector.

He expressed optimism that the rolling out of the system, coupled with other electronic payment channels such as the Instant Pay and the e-bills pay, online banking and the several other channels, would move the nation faster to a cash-lite economy and turn around the fortunes of the economy towards achieving the President’s vision of building Ghana beyond aid.

Speaking at the launch of mobile money interoperability system, the Vice-President noted that although Ghana has made many advances and reforms in the banking sector to enhance financial inclusion, the majority of Ghanaians, nearly 70 percent, are still unbanked.

The mobile money interoperability system, which seeks to revolutionise the banking sector, would, among others, enable mobile money customers to send and receive money directly to and from each other, irrespective of the network they are on.

The second phase of the system would afford mobile money customers to move money from their mobile money accounts into bank accounts with ease.

“The mobile revolution, however, provides a major opportunity to solve the problem because millions of people have mobile phones. If financial services can, therefore, be delivered through the mobile phone, we could cover 70 percent of the bankable population”, the Vice-President noted.

He added that in a situation where a large segment of the population is unbanked, it means that so much money and savings are held outside the banking system, hence the importance of increasing the supply of savings in the financial system through making financial services available to the population to beat down interest rates.

“One should expect that in an economy where savings in the financial system are low for whatever reason, market-determined interest rates would be higher”, he added.

The mobile interoperability system, according to the Vice-President, “reinforces President Nana Addo Dankwa Akufo-Addo’s belief that with the right conditions and leadership, there is nothing we cannot achieve as a people”.

The introduction of the mobile operability system, according to the Vice-President, forms part of government’s policy of increasing financial inclusion, as well as improving domestic resource mobilisation, by first laying the foundations to formalise the Ghanaian economy.

“One of the quickest ways to the formalisation of the economy is to bank the unbanked,” he added.

The Vice-President noted that the situation of many Ghanaians remaining unbanked has arisen because the traditional payment systems offered by the major banking institutions do not address the key requirements of the unbanked population.

“Most of the payment system infrastructure which has been developed in Ghana has its origin in the developed world, which has a completely different environment. So for example, when a bank introduces a debit card as an alternative to cash, virtually the entire rural population is excluded because there is limited telecommunications infrastructure, no bank, no ATM or no point of sale offering VISA or MasterCard services”.



He noted further that if the formalisation of the economy is done on a comprehensive scale, financial resources locked up in non-financial assets would be brought into the banking system for intermediation, and this could be a significant source of resources “representing potentially three to five times what is being currently intermediated in the financial system”.

The Vice-President added that with over 37 million Ghanaians connected to mobile phones, a huge number of people can be brought into the financial space just by using mobile phones.

“The mobile phones are actually great tools of financial intermediation to mobilise deposits and also lend, particularly to our micro, small to medium-scale enterprises. If we are able to position mobile money appropriately, we can turn the fortunes of the economy around. And this would be good because it will affect the small businesses, who are in the majority and who are the ones in dire need of our support.”

The phase two of the interoperability platform, according to the Vice-President, will complete the Financial Inclusion Triangle by allowing the movement of monies between and among telcos, banks and e-zwich accounts in a seamless manner, and the flow is back-to-back.

“Also, upon completion of phase two, customers will be able to pull monies from bank accounts to their mobile money accounts. The e-zwich integration is ongoing and the central bank has informed me that all banks will be required to complete the integration that allows customers to pull monies from bank accounts to their mobile money accounts by July 15 this year.”

The Vice-President was optimistic that with the milestone achieved, coupled with other electronic payment channels, such as the Instant Pay and the e-bills pay, online banking and the several other channels, “we should be moving faster to a cash-lite economy.”

Governor of the bank of Ghana, Dr Ernest Addison lauded the collaborative effort of the various stakeholders in pushing the boundaries of the financial sector of the country.

He noted that the introduction of the mobile money interoperability system presents a huge potential for revenue mobilisation considering the growth of the mobile money ecosystem in Ghana.

The introduction of the system, he said, should offer banks in the country the leverage to reach out to the unbanked.

The Chief Executive Officer (CEO) of the Chamber of Telecommunications, Ken Ashigbey, cautioned that any attempt to tax mobile money transactions would be a disincentive to the quest for financial inclusion.