The issue of the building a cashless economy in Ghana has been an interesting topic for discussion on many platforms. This issues is making waves in Ghana because of the way transactions of business has transformed some few years down the line from the old traditional system of carrying huge amount of cash to pay for goods and services to a cashless one,and it done at easy irrespective of one geographic location through the use of ATM cards and Mobile money transfers currently been offered and powered by all the major telcom operators in Ghana. MTN Ghana is leading the discussions on the possibility of building a strong vibrant cashless economy in Ghana. MTN Sales & Distribution Executive, Mr. Ebenezer Asante present's the MTN Idea..... Building a Cashless
Economy in Ghana: Prospects, Challenges, and the Way Forward
Gathering
here today to discuss the prospects of a cashless Ghanaian economy is a truly
important step, because as a growing economy we must focus on a structured
programme to achieve the benefitsof a cashless economy.
In its ideal
form, a cashless economy is one in which
the purchase of goods and services and the payment of debtsand remittances are
done through electronic money media, (via credit and debit cards, direct transfers
from one account to another, smart cards, mobile payment systems, and other
technologies, etc.).
The benefits
of such an economy are numerous and include:
·
Reduction
in the cost of printingcurrency notes, replacing them and transporting cash
along the value chain from the Central Bank to banks to businesses and
consumers. As an example, according to
Nigerian Central Bank Governor, SanusiLamidoSanusi, the direct cost of cash
management to the Nigerian banking industry is estimated to be N192 billion
(approximately US$1.9 billion)by 2012;
·
The
benefits include the reduction in the risks associated with transporting
currency notes, both for banks and individuals (robbery, loss from fire or
flood, etc.);
·
Increased
service options for consumers, including efficiencies created when goods and
services may be purchased and bills paid 24 hours a day, year round, without
having to be physically present; Thus time, space and distance are no barriers
for economic transactions in a cashless economy.
·
The
net effect of the benefits is Business and economic growth through e-commerce
promotion, enhanced individual, business and national productivity, with
positive impact on job creation and its attendant multi-sectorial multiplier
effects.
It
is therefore not surprising that the prospect of spreading the concept of a
cashless economy has created some excitement among financial sector experts in
Africa and beyond.
Mobile Money and Cashless Transactions
Fortunately, technology
is helping to accelerate the process of cashless economy particularly in the
so-called informal financial system in Ghana and the developing world at large.Products
on the Ghanaian market that support our march towards a cashless economy include
the E-zwich smart card, ATM cards, and of course mobile money services such as
the MTN Mobile Money and its peers in the market.
A
joint research by Mckinsey and the Financial Access Initiative in 2009 reported
that more than half of the world’s adults are unbanked; (2.5B people) but two –thirds
of the unbanked, 1.8B adults have access to mobile phones. This growth (access
to mobile phones) combined with the ability to deliver financial services
telephonically, now makes it possible to tap vast markets that bankers
previously considered unprofitable.
Mobile
Money services have transformed the way in which people handle their finances,
allowing people to transfer money, make purchases and pay bills with a few key
strokes on their mobile phones.
According
to a research report by Aite Group, mobile payments will reach $214 billion in
gross dollar volume in 2015, up from 16 billion in 2010 which represents a 68%
compound annual growth.
In
July 2009, MTN Ghana introduced MTN Mobile Money, which provides customers with
immediate access to banking services through their mobile phones. In 2012
(three years later) it projected to record about 13.5 million transactions totaling over GHc 300millionwhich represent over 265% growth in the value transacted.
To
throw some practical light on cashless economy possibilities available right
here in Ghana, please permit me to touch on some wonderful Mobile Money services
on offer.
The
MTN Mobile Money service offers subscribers many convenient and safe services,
including the ability to:
·
purchase
MTN airtime,
·
transfer
money to any part of Ghana that has Network coverage,
·
pay
bills (DSTV, ECG, MTN Post Paid Bills)
·
make
bulk payments to many people spatially at a click of a button. ,
·
purchase
micro insurance (Mi life Insurance) and pay for micro investment products
·
shop
online(airline tickets, shops, restaurants)
·
have
digital access totheir salaries and loans
·
maketuition
payments.
MTN Mobile Money also
gives the millions of Ghanaians, who, for one reason or another, are unbanked,
access to banking services, thus improving the banking culture of both urban
and rural populations.Tens of Thousands of MTN mobile phone subscribers now
have e-wallets where their monies are lodged and saved. This creates a money
savings habit amongst subscribers and helps in economic growth. Mobile Money
affords better and efficient financial inclusion.For example, MTN Subscribers
in remote parts of Ghana without traditional financial coveragehave signed on
to Mi-Life Mobile Insurance by paying monthly fees as low as 1, 2 or 5 Ghana
Cedis. These payments are automatically effected from their mobile phone wallets.
Another
MTN Mobile Money service is the Bank Integration system which allows a Mobile
Money subscriber to link their bank accountsto mobile wallets. Thus they can
pull money directly from their bank accounts to mobile wallets in order to
effect transactions from their phones. . In addition, there is the CardlessATM
service which allows subscribers to withdraw money from their mobile wallet
using the ATM. This serves as an alternative to visiting a merchant point for
cash withdrawal.
MTN
Mobile Money is provided to its customers in partnership with 10 banks,including;
Ecobank, Fidelity, GT, Stanbic, Zenith,CAL Bank, Merchant Bank, Access Bank,
United Bank for Africa and Agriculture Development Bank. MTN Mobile Money
currently has over two million subscribers on its platform and about 5,000
active merchant points. The use of MTN Mobile money services cuts across the entire
spectrum of the economy spanning the working class, students, traders,
institutions, SME’s and retailers. MTN Mobile Money is contributing to making
Ghana a cashless economy by making it possible for millions of Ghanaians to
conveniently perform their everyday money transfer and other transactions,
anywhere they are, from their phone.
With
these wonderful services available to everyone having any mobile phone right
here in Ghana, why do people still engage in such risky ventures of carrying
large sums of money and attracting unwanted elements like highway robbers? Why
do business people in Ghana such as those in Construction, Real Estates,
Produce Buying, Security firms, etc still travel to the regions districts and
towns just to pay Wages and other bills? Building a cashless economy is fraught
with some key constraints.
Challenges and Way
Forward
Given the
benefits a cashless society affords us, it is important that we continue to do
all we can to encourage a cashless economy based on technology. However, there are challenges we must resolve
in order to chart a clear path forward.
We must focus on a number of key areas in the short and medium term:
·
Policy -- We need clear policies in place
that would allow us to follow a structured advance towards achieving the full
benefits of a cashless economy, including a national policy that encourages
more electronic-based transactions, while discouraging physical cash usage and
circulation. Nigeria set an example when
the Central Bank instituted a cashless economy policy to:
o
drive
development and modernization of Nigeria’s payment system in line with the
country’s vision 2020 goal of being amongst the top 20 economies by the year
2020. According to them, an efficient and modern payment system is positively
correlated with economic development, and is a key enabler for economic growth.
o
reduce
the cost of banking services (including cost of credit) and drive financial
inclusion by providing more efficient transaction options and greater reach.
o
improve
the effectiveness of monetary policy in managing inflation and driving economic
growth.
o
curb
some of the negative consequences associated with the high usage of physical
cash in the economy
While
we are by no means prescribing the details of the Nigerian policy and its
implementationprocess as a silver bullet (given the inherent problems), we
believe apolicy that prescribes a structured approach is a step in the right
direction to a well thought-out, properly sequenced cashless economy
implementation.
·
Infrastructure – We need to expand our
infrastructure and systems to the point where we are ready for a cashless
economy, and electronic transactions are truly ubiquitous and sustainable; so
that everyone – retailer, service provider, consumer or business – can have the
option to transact electronically regardless oflocation, or even time. This
means that the technology coverage must be adequate, as well as other
supporting structures such as energy availability for consistent connectivity
and reduced downtime.
In
the long term, we should be driving towards universal access and convergence to
all forms of cashless mode of payments – All ATMs/ E-Zwitch/Mobile Money must
cross-transact.
·
Security
– In cultures
where a cashless economy is well advanced, we have learned that some of the
pitfalls include inadequate security.
The need to have secure systems that allow citizens to transact without
worry of identity theft or other cyber fraud is critical, and so we must ensure
our electronic transaction/payment systems and processes are truly secure.
·
Cultural
resistanceand Education
– Since MTN rolled out MTN Mobile Money, we have experienced some resistance
from prospective users simply due to the fact that as a country we are used to
a cash culture. However, it has been our
experience that once people start using Mobile Money they wonder why they did
not start to do so sooner. This tells us
we must have a singular focus on educating people about the full benefits of a
cashless economy – the benefits afforded them as well as the benefits afforded
the country as a whole. This is
something that must be done by all stakeholders because as a country we all
benefit. Perhaps government should consider using its own purchasing power to
radically promote Cashless payments as a first step. MTN commits to continue
its investments in this regard; to make Mobile Payments popular, acceptable and
trusted nationwide. This is our commitment and we shall lead the way.
When we
consider the history of money, we realize that what we have today is the result
of many years of innovation; innovations that have been in response to the
changing needs of mankind and the need to find solutions outside our
limitations. Centuries ago, we began
with cashless society based mainly on barter, gift economics and debt, and then
evolved to the use of money. Technology
now offers us the opportunity to go back to being a cashless economy, albeit a
more efficient one that is not based on barter and gift economics, but allows
us fast, safe and convenient transactions.
We already
carry our phones and our wallets wherever we go; why not use the telephone
device and other smart cards as the medium of financial transactions, for the
efficiencies we get from the ability to transfer money seamlessly,pay our bills
and purchase goods and services without having to carry money around?
I
will like to conclude by saying that Telcom Operators like MTN can and will promote
cashless transactions;a lot will depend on the Central Bank and Government in
the areas of policy, advocacy and the enabling environment for a structured/centralized
approach.
Thank you.
