TechPression

Tag: Mobile Money

  • Mobile money’s value plummets by GH10 billion as the e-levy implementation date approaches.

    Mobile money’s value plummets by GH10 billion as the e-levy implementation date approaches.

    Even before the Electronic Transaction Levy (E-levy) goes into effect next month, available data shows that the mobile money platform lost approximately GH10 billion in value between November 2021 and January 2022—a development that raises serious concerns about the new tax’s ability to generate the expected revenue.
     

    The Current Realities for Mobile Money In Ghana

    According to the Bank of Ghana’s Summary of Economic and Financial Data (March 2022), the mobile money platform, which is the largest payment system network in the country and is seen as the main driver of financial inclusion, saw its transaction value drop to GH76.2billion in January 2021 from GH86.1billion in November 2021 (the same month the E-levy was announced), indicating a GH9.9billion drop. Since its inception, the platform has never seen such a massive drop in value in the span of two months within a year.
     
    Aside from the decrease in platform value, the total number of transactions decreased by 24 million in January 2022 compared to November 2021. The number of active agents fell by 7,000 during the same time period, while active mobile money accounts fell by 600,000 during the same time period.

     

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    All of these losses since November 2021, when Finance Minister Ken Ofori-Atta announced the E-levy, point to one conclusion: users of the mobile money platform are unwilling to pay the planned tax and may have reverted to cash choices. That is where the government plans to get some of the money from the E-levy.

    Mobile Money : Money on the go

    Dr. Vera Fiador is a senior lecturer at UGBS. In an interview with the B&FT, senior lecturer at the University of Ghana Business School, Dr. Vera Fiador, agreed that the expected GH7 billion revenue targetted from the E-levy will not be met – given users’ reluctance to use the mobile money platform even before the tax is implemented on May 1, 2022.
     
    “The chances are that the revenue target from mobile money will not be met.” According to current trends, by the time they are ready to apply the tariff, most people who can live without mobile money will have left. The net effect on small enterprises will be enormous, and we will see a large number of them making cash transactions immediately. She explained, “People will stroll into the banking hall, cash their money, or use an ATM and pay at the counter,” she explained.
     
    She emphasized her fear that the poor will face the brunt of the new levy given that the mobile money platform is their only alternative for financial transactions.

     

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    “When you look at the demographics, who are the people that have no choice but to utilize mobile money?” It is those at the bottom of the pyramid. As a result, we are, in some ways, punishing the poor. All of the others have options, such as cheques, but the poor have no choice but to utilize mobile money. I’m concerned because we’re about to dismantle all we’ve achieved over the years, making the poor even more impoverished. “The cascade effect and the issue of inequity are a little concerning,” she remarked.
     
    According to the Finance Minister, the E-levy has been reduced to 1.5 percent and will go into effect on May 1, 2022.

  • eCedi: Ghana Adopting Crypto-like Mobile Money

    eCedi: Ghana Adopting Crypto-like Mobile Money

    The Bank of Ghana (BoG) has announced the will to introduce eCedi. In the design paper, the central bank is attempting to regain banks’ waning influence in financial transaction intermediation, which is now dominated by mobile money.
    The BoG appears to see eCedi as a strategy to “contain the growth of mobile money” and reclaim full control of all financial activities in Ghana.
    Despite the fact that eCedi would be issued by banks, the document indicated that it will make heavy use of existing payment infrastructure and rely on payment service providers and specialist deposit-taking institutions.

    According to concerned industry stakeholders, there is sufficient evidence that the BoG is on a mission to use the eCedi to strengthen banks over mobile money, notably in the field of financial transaction intermediation. It is also aimed at improving financial inclusion. One of the features is to ensure the usage is free of charge. 
    Stakeholders believed that such a sensitive implementation will be expected to be carefully implemented, with significant participation from all stakeholders and stringent milestones and timetables.

    Bank of Ghana declared its intention to explore a CBDC within the framework of the financial sector digitalisation program. It is in pursuit of this goal that Bank of Ghana announced the concept of the eCedi — a digital version of the Cedi banknotes and coins

    This statement was made by Dr. Ernest Addison, the governor of the Bank of Ghana. However, the lack of implementation details has made various stakeholders be concerned about its implementation. The financial sector players are waiting to see what happens.

    However, there remains strong feeling that BoG’s leadership on financial intermediation is actually advantageous for everyone because the main benefits include cheaper fees and a far better settlement system for all licensed players.
    Meanwhile, the provided document explains how eCedi will help consumers, banks, fintech, merchants, the government, and the BoG.

    The following are the whole specifics of the benefits:

    Consumers

    Ghana

    Users would profit greatly from a digital currency issued by the central bank, acknowledged as legal cash in the appropriate jurisdiction, and simple to use. The following features of the eCedi, according to BoG, will encourage customer adoption:

      • A payment system that is interoperable and may be used by anyone, wherever in the country;
      • Last-mile access to digital payment services (inclusiveness);
        Simplifying access to and use of a digital form of money would spur competition, making it easier for service providers to develop more consumer-centric innovative products and services.
      • Efficiencies gained by the entire banking sector using a digital form of cash are expected to result in decreased service delivery costs.

         

    Bank

    Although the CBDC may result in a shift from deposit money to digital currency, the eCedi will be used to supplement, preserve, and reinforce commercial banks’ current role as financial intermediaries and important service providers to consumers. Commercial banks are currently under threat from the rise of huge global payment service providers such as Paypal, which could result in a loss of direct client interaction. According to the PwC Ghana Banking Survey1 from 2021, 95% of respondents believe the eCedi will have a favourable influence on the banking system.
    Because of the vital role of banks, the BoG recommended architecture model for the eCedi with the goal of retaining the existing financial service landscape. In the eCedi ecosystem, banks are anticipated to serve the following functions:

      • CBDC distribution from the central bank to the general public
      • Wallets, applications, and other creative technological services for consumers to use the eCedi;
      • Products and services for merchants to accept the eCedi.
      • Develop and launch innovative services, such as programmable money and machine-to-machine payments, using the eCedi.

    FinTech

    In Ghana’s financial sector, mobile money operators and non-bank financial organisations such as microfinance institutions, rural and community banks, savings and loan companies, finance houses, finance and leasing firms, remittance companies, and credit unions play critical roles. The total number of people who have used their services has increased.
    Among the traditionally excluded group, they have made the greatest contribution to financial inclusion.
    The eCedi ecosystem has the potential to increase financial inclusion by alleviating existing problems, such as liquidity issues associated with deferred net settlement of mobile money interoperability transactions.
    It is also projected to provide FinTechs with new prospects, such as:

      • Supply consumers with eCedi wallets, applications, and other services;
      • build on existing infrastructure without relying on fee-paying customers infrastructure of large-scale private companies;
      • create goods and services that enable merchants to accept and use the eCedi;
      • offer cutting-edge services such as programmable money and machine-to-machine communication-based payments in order to accelerate the digitalisation of financial services and trade.

    Merchants

    Merchants are currently charged a percentage of the transaction value by payment market intermediaries. Merchants, too, pay for cash handling services. These two fees, which have been a stumbling block to merchant acceptance of digital payments, can be decreased using the eCedi for the following reasons:

    • The inclusion of eCedi as a retail payment mechanism provides competition to the Ghanaian market. Merchant fees are reduced as a result of the payment ecosystem;
    • The streamlining of the payment chain has the potential to lower payment costs.

    Government

    The eCedi’s adoption would sufficiently help the “Digital Ghana Agenda” by introducing opportunities for innovative services:

    • Automated payments to the government from customers (customs, fees, and so on);
    • Social welfare payments that can be programmed;
    • Taxation that is open and transparent.

    Bank of Ghana

    Regulators throughout the world are facing new problems as the financial services industry undergoes rapid technological development. Ghana is dealing with comparable issues and plans to use the eCedi to:

    • Encourage financial participation;
    • Encourage payment system competition;
    • Improve the transmission mechanism for monetary policy; 
    • Retain monetary independence;
    • Increasing transparency;
    • Increase financial security;
    • Reduce the cost of currency printing
  • FinTechNGR’s New Platform Aims to Boost Startup Growth

    FinTechNGR’s New Platform Aims to Boost Startup Growth

    The FinTech Association of Nigeria (FintechNGR) has launched The Start-Up Marketplace, a platform designed to provide start-ups in the fintech ecosystem with free or heavily discounted services in funding, legal, infrastructure, cybersecurity, data privacy, business development, and a variety of other areas, to help them grow faster.

    “The Start-Up Marketplace will aid in the development and deepening of Nigeria’s FinTech talent pool,” Ade Bajomo, President, FinTechNGR and Executive Director, Information Technology and Operations at Access Bank Plc, said at the association’s first conference of the year, dubbed “Fintech Outlook 2022.”

    “The platform will also encourage research and development to elevate innovators and start-ups, foster a supportive regulatory environment to grow the industry, facilitate local investors’ participation in FinTech funding, and position local start-ups and innovators to build and develop durable and strategic intellectual properties,” says the company.

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    According to Bajomo, the COVID-19 epidemic caused businesses around the world to have a difficult year. Despite this, he stated, start-ups in Africa’s most powerful countries have continued to flourish and demonstrate immense promise, becoming increasingly important in the new normal.

    He explained that the rising investment in Fintech start-ups demonstrated how much the industry has piqued the interest of investors and Venture Capitalists, who saw the industry’s potential for growth and resilience.

    Fintech Ecosystem In Africa

    FinTechs dominated fundraising in Africa, according to him, accounting for about $3 billion of the roughly $5 billion raised by African digital start-ups in 2021. Nigerian start-ups raised $1.09 billion in the same year, accounting for 73.5 percent of the $1.37 billion raised by start-ups globally.

    Daniel Awe, the Head of the Africa Fintech Foundry, recognized increased innovation as a key cause for the growing interest. “We’re already seeing FinTechs innovate in areas like greentech, digital insurance, blockchain, and financial inclusion, to name a few.” That said, we must continue to create strategic alliances with other ecosystem participants in order to develop game-changing innovative solutions and uncover new opportunities for growth, consumer pleasure, and improved business practices. The Foundry is contributing to this growth by launching businesses that can compete in a variety of industry verticals by offering new and enhanced digital products to end-users, allowing for the establishment of new markets.”

    The virtual event also revealed trends and forecasts across FinTech verticals, including lending, payment, mobile money, banking, infrastructure, regulation, partnerships, skillsets, wealthtech, insurtech, cybersecurity, data privacy, open banking, decentralized finance, and other sectors.