Speaker
Mr. Sampson Akligoh
Financial capability and asset building
Dr Richmond Atta-Ankomah
Institute of Statistical, Social and Economic Research, University of Ghana
Institute Of Statistical Social And Economic Research, Ghana /ecpc
Mobile Money: Financial inclusion and welfare effects in Ghana
Abstract Narrative
“Background. The extant literature on mobile money’s role in achieving financial inclusion has largely focused on its effect on ‘immediate’ financial inclusivity indicators, particularly deposits/savings, and as an electronic payment tool for cash transfers and payment for goods and services. This paper focuses on ‘higher tier’ financial inclusivity services (i.e., access to credit and insurance) and how the advent of mobile money facilitates users’ access to these financial services. Improved access to credit and insurance helps deepen financial inclusion beyond access to savings and payment tools. Credit and insurance are critical for financial security. They facilitate individual and household consumption smoothening during shocks, minimizing the impact of risk and uncertainties on consumption, investment, and production. The paper also (a) interrogates whether mobile money use in Ghana has had a significant welfare effect, and (b) compares the mobile money effect with those of access to traditional bank and non-bank financial institutions, including informal ones. Methods. This study uses data from the most recent Ghana Living Standards Survey (GLSS 7) undertaken in 2016/17. The analyses are carried out using regression and quasi-experimental econometric tools (i.e., treatment effect models). Specifically, the ‘doubly robust’ augmented inverse-probability weighted and the propensity-score matching estimators are used to deal with potential selection problems and provide estimates of the financial inclusion and welfare effects of mobile money use in Ghana. Results. The results show that ownership of mobile money account has statistically significant and positive effect on access to credit by Ghanaian households, but no effect on access to insurance. However, subsample analyses by gender of the household head show that mobile money account ownership has statistically significant effect on access to credit only for male-headed households. Regarding welfare, the results show that access to mobile money has a statistically significant and positive effect on household consumption and reduces the likelihood of the household being poor. However, these effects are lower in magnitudes, compared to the welfare effects of access to traditional banking and non-bank financial institutions. The mobile money effects on welfare (consumption and poverty status) for male-headed households are higher than those of female headed households. Conclusion and implication. This paper contributes to the literature on mobile money’s critical role in deepening financial inclusion in Ghana and other emerging economies. These findings are critical for the development of gender-sensitive policies and programs aimed at enhancing user’s welfare. ”
Mrs Patience Densu
Ma Student
Institute of Statistical, Social and Economic Research, University of Ghana
Traders perspective on the advent of mobile money and its implications for the financial services industry: Evidence from Ghana
Abstract Narrative
“Background. Financial technology (FinTech, e.g., mobile money) has gained ascendency in many developing economies, including Ghana. FinTech literature has largely focused on its potential impact on financial inclusion and understanding its adoption patterns and trends but with little emphasis on its implications for traditional banking services, particularly from mobile money users’ perspective. For instance, mobile money platforms now offer services similar to those of the traditional banking or financial sector, including payments, savings, insurance, loans, and international remittances, but scant evidence exists on user’s experiences. Therefore, this study investigates traders’ perspective on how the mobile money sector’s advancements have affected their experiences with the traditional banking or financial industry. Specifically, we examined (a) the level of mobile money usage among traders, (b) traders’ access to financial services and its effect on traders’ reliance on formal financial services, and (c) the challenges associated with the mobile money service. Methods. This mixed-methods study used a convenience sample of 200 traders located around the Madina Main Market in Accra, Ghana. Quantitative data were collected using questionnaires, while qualitative data were collected through in-depth interviews. Descriptive statistical methods were used to analyze the quantitative data while the qualitative data were thematically analyzed. Results. The study looked at 200 traders constituting 144 (72%) females and 56(28%) males with the dominant age group being 36-45 years (23.50%). The results show that 88% (176) of the traders own mobile money accounts, the majority of whom are females. Though most traders (89%, n=178) own bank accounts, they carry out most of their business transactions through mobile money. For instance, in comparison to traditional banking, almost all the account owners (98.8%) transfer money to friends and family through mobile money, 77.9% prefer to deposit money on their mobile wallet, 87.7% pay creditors through mobile money, and 77.5% prefer savings through mobile money wallet. Also, 21.8% of the respondents indicated taking loans from mobile money service providers, and 16.8% from banks. Although most respondents carry out their business transactions through mobile money, only 12% of mobile money account owners purchase mobile money insurance policies. From the thematic analysis done on challenges associated with the adoption of mobile money, the following themes emerged: high risk of fraud, high transactional charges and technical problems (e.g., poor network systems). Conclusion. Respondents’ preference for mobile money services can be attributed to the relatively fast, convenient, and reliable nature of mobile money services. However, mobile money become a major tool for financial inclusion, there is need for policies that ensure consumer protection. The advent of an interoperability system in many developing economies, including Ghana, will enhance the connectivity between traditional banking and mobile money systems, allowing traders to use both systems concurrently.”
Dr. Stephen Hammond
Financial capability and asset building
Ms Adadzewa Otoo
Policy Specialist
Alliance For Financlal Inclusion
A research agenda for digital financial literacy for policy action in Africa
Abstract Narrative
“Background. The past decade has witnessed an increasing role of Digital Financial Services (DFS) in financial inclusion. The financial industry is changing rapidly, with innovation in financial technology (fintech) driving sophisticated financial products in e-money and across investment, insurance, pension, digital currencies, and e-commerce. At the same time, a growing incidence in DFS-related risk issues such as fraud, data protection, and over-indebtedness adversely impact consumers’ trust, with the potential to discourage uptake and usage of DFS. If these challenges are left unaddressed, they could erode gains made in financial inclusion in low-income countries. Therefore, there is an urgent need for research to inform interventions that build consumers’ knowledge, skills, and trust to effectively use these DFS products and services. The presentation will highlight relevant research and policy considerations necessary for advancing Digital Financial Literacy (DFL). DFL, the simultaneous application of digital literacy and financial literacy to improve the usage of financial services, is a topic that is becoming increasingly consequential in the way policymakers are rethinking aspects of Digital Financial Services. Discussion. The presentation will discuss a framework within which major emerging DFL issues of concern to policymakers can be investigated. These issues include (a) Identifying and understanding the emerging issues and trends necessitating the growing significance of DFL in policy circles and providing a conceptual framing of problems to help bridge the demand-supply gap between policy practitioners and researchers, (b) investigating the different approaches to the design of DFL instruments and deployment for the purpose of addressing the emerging issues., (c) providing comparative evidence on which types of DFL instruments work best for different kinds of customer demographics, regulatory environment, and products, and (d) understanding the limitations of DFL to address the emerging DFS related issues across Africa. The presentation will also discuss how applying this framework could produce the needed evidence to compel regulators and policymakers to rethink the current objective and scope of financial literacy and capability, which is mostly generic and more aligned to the traditional cash-based financial sector. Conclusion. As African economies increasingly move away from cash-based to digital platform-based economies, the patronage of digital financial services by both individuals and SMEs is expected to grow exponentially. The suggested framework will help reduce digital financial risks when consumers assume more responsibility for their financial planning and management, including pension, insurance, taxes, and investments, which professionals handled in the traditional workplace. Researchers are currently behind the curve, and therefore, the supply of research and evidence is not at par with the need and demand. Because it is a recently emerging field, many of the key issues are yet to be sufficiently conceptualized and framed. ”
Prof Samuel Lartey
Head of Research and Consultancy
Chartered Institute Of Bankers, Ghana
Banking the Unbanked: A Regulatory Framework to Connect Traditional Banks to Nonbank Financial Institutions
Abstract Narrative
Background. The Bank of Ghana has provided the regulatory framework to open up the financial sector and protect all actors. This framework has facilitated advancement in financial technology in Ghana’s financial sector, fostering financial inclusion through increased provider options. For instance, the introduction of the e-zwich card by the Ghana Interbank Payment and Settlement Systems Limited (GhIPSS) allowed for interoperability between traditional banks and nonbank financial institutions (e.g., mobile phone technologies). These changes have allowed new players, particularly the Telcos and Techfins, to not only open alternative banking services to the unbanked, but also use data to help financial institutions better understand consumers’ needs and preferences for second-tier add-on financial products and services. These alternative banking channels, such as mobile money, have contributed to more Ghanaians (58%) owning accounts. There is a need to document this process to inform other countries’ pathways towards responsibly reforming their financial regulatory framework.
Discussion. This presentation will share Ghana’s experience in reforming its financial regulatory framework to advance financial inclusion. The presentation will discuss (a) the trends and changes in the financial sector since the GhIPSS in 2007, (b) lessons learned since the central banks’ adoption of an open regulatory framework and challenges that have ensued, and (c) strategies that banks and the central bank have implemented to respond to the evolving challenges while protecting consumers.
Conclusion. Alternative technologies and banking channels have the potential to attract new customers. However, there is a need for a robust regulatory framework to prevent and mitigate risks associated with digitization and innovation payments. Ghana’s swift response in addressing the financial sector’s vulnerabilities is commendable. Still, policy evaluation is needed to develop better strategies to drive digitization and innovation of the financial sector.