Ghana's enthusiastic efforts of becoming an economy less dependent on cash in the West African sub-region have been boosted by the meteoric penetration of smartphones, robust IT infrastructure, sound policies and growing middle-class.
Similarly, several vital elements have contributed to the shift to digital payments, notably good connectivity, growing financial infrastructure, and a continuously improving regulatory environment.
Significantly, there is also a common recognition of the need to continue building an inclusive and responsible digital payments ecosystem in the West African second largest economy.
Doing so will drive financial inclusion, particularly for women, improve transparency of payments, and open up new markets for goods and services, which in turn supports economic growth.
Creating an economy where everyone can pay and get paid digitally
Ghana’s Ministry of Finance and the UN-based ‘Better Than Cash Alliance’ recently released a report titled 'Building an Inclusive Digital Payments Ecosystems: The Way Forward' documenting the country’s progress in creating an economy where everyone can pay and get paid digitally, instead of cash.
In the report, three priorities emerged to help the government and citizens achieve the most benefits of digitization;
1. Investing in infrastructure for digital public utility payments:
80 percent of the population uses public essential services such as water and electricity, but only 20 percent of the population has access to digital technology such as smart meters.
By investing in smart distribution infrastructure that digitize end-to-end delivery and payment, it will increase efficiencies and ease of use for citizens – ultimately increasing adoption.
2. Digitizing payment of government fees and fines:
With 97 percent of fees and fines currently paid in cash, the Ghanaian government could gain enormous cost savings if they commit to using digital payments exclusively and mandate all government agencies to use a central payment system.
3. Encouraging digital payments in the Fast Moving Consumer Goods (FMCG) value chain to support digitization of small retailers and customers:
For FMCG companies operating in Ghana, 96 percent of distributor payments and 59 percent of vendor and employee payments in volume are made in checks, according to the report.
However, 99.9 percent of individual payments for consumption goods by volume are still completed in cash, as individuals continue to purchase essential consumer goods, including food, in the informal economy with small retailers.
Perhaps, this is the void FlexiPay which is the latest mobile money and value added service platform is in to fill. "You can send mobile money, buy airtime and pay utility bills. Also, you can use your visa, and Mastercards as well", according to the promoters of the platform.
By transitioning away from cash, small business owners can avoid storing large amounts of cash, drive customers’ adoption and boost access to formal saving and loan products which can expand their economic potential. This will especially improve the lives of women, who represent many of the small retailers in the FMCG sector.
FlexiPay has the tremendous potential to cause a shift to digital payments in this value chain system in the country.
Growing mobile money transactions
Mobile money transactions are consistently growing as the total number of transactions keep increasing monthly.
Latest figures from the Bank of Ghana (BoG) indicated that 21 million Ghanaians have mobile money accounts as against 11.4 million bank accounts.