Ghana has made strides in recent years to deepen and broaden its digital financial services ecosystem. The government has prioritised the segment as key to bolstering financial inclusion, as well as ensuring business continuity in the event of another crisis such as the Covid-19 pandemic. These efforts pre-date the pandemic: the Electronic Transactions Act of 2008 outlined the regulation of electronic communications and related transactions. The Payments and Services Act of 2019 was another major step towards strengthening digital payments. It amended and consolidated laws related to payment systems and services, and strengthened the regulations of institutions that offer payment services. These measures provide a clear indication of the segment’s growth prospects and the need to streamline financial technology (fintech) activities. Fuelled by advancements in innovation and a mobile penetration rate of around 65% as of October 2021, Ghana’s efforts to increase financial inclusion via digital channels have been largely successful.
Mobile Money
According to the Bank of Ghana (BoG), the country’s central bank, the number of active mobile money accounts rose from 12m at the beginning of 2019 to 18m in June 2021. The value of mobile money transactions followed a similar trend, increasing by more than 230% over the same period to GHS70bn ($12bn). Meanwhile, the number of fintech service providers – including payment service platforms and electronic money issuers – continues to grow.
The ecosystem has been supported by the authorities’ efforts to facilitate innovation. For example, in 2021 the BoG announced it would introduce a digital currency called the e-cedi, which would make Ghana the second country on the continent to do so, following the launch of Nigeria’s e-naira in October of that year. Despite the gains made so far, however, growth in the fintech ecosystem has been heavily skewed towards payment platforms and has not fully transcended into areas such as insurance and investment.
Adaptation
The lag in the diversification of digital offerings across the investment landscape is largely due to the continued preponderance of manual account opening and verification processes. Until the start of the pandemic most investment accounts were opened in person with investment house representatives. The sector is also hindered by the dearth of digital platforms that allow individuals and institutional investors direct access to the stock or fixed income market without the third-party intervention of brokers. If spearheaded by licensed brokers and the BoG, innovations in this regard will not only help give the investment landscape more depth, but more breadth as investors enter the market.
Even as these challenges remained, the pandemic caused players in the market to adjust quickly to meet the virtual demands of both current and prospective clients. This accelerated the shift towards digitalisation, and as of end-2021 most investment firms were in the process of automating their processes and going fully digital. Moreover, several have introduced online portals and leveraged existing telecommunications infrastructure to roll out unstructured supplementary service data codes to facilitate investment processes.
Future Focus
Ghana’s digital financial services scene is still in its developing stages when compared to more established markets such as Kenya and South Africa. However, the country’s youthful population, current adoption rate, increasing mobile penetration and policy direction suggest that the segment has significant growth prospects. This expansion is expected to fully spread throughout the financial system in the medium to long term as the government redoubles efforts to strengthen the country’s digital infrastructure. The BoG will be vital to creating the necessary framework to develop the digital investment landscape, as well as mitigating against potential risk as market players push the envelope to provide innovative digital investment solutions to the community.
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