Mobile Money: The chief driver of Ghana's digital economy - Part 1

The recent lecture by Vice President Dr. Mahamudu Bawumia on Ghana's digital economy journey could have easily been titled: MOBILE MONEY - THE CHIEF DRIVER OF GHANA'S DIGITAL ECONOMY.

The lecture, more than anything else, highlighted the ubiquitous and pervasive nature of mobile money (MoMo), for which it has become the bedrock and reason-in-chief for almost every single component of Ghana's digital economy. It may not be same for other economies, but for Ghana, it surely is.

For emphasis, let me say that the ubiquity of mobile money is such that the "sophisticated" use cases like utility bills payment, school fees payments, online and offline shopping, remittance, Uber/Bolt/Yango fares and the like have long been conquered by mobile money. Now we are at a stage where even coconut sellers, waatse sellers, khebab sellers, trotro driver's mates and practically every Akosua, Nortey and Dzigbordi who has anything to sell in any corner of the country accepts mobile money payment.

Let the point be made quickly here that, Journalists for Business Advocate (JBA) strongly believes the Dr. Bawumia was very right when, last year, he publicly stood against the suggestion by a minister that mobile money service fees should be taxed extra. His reason then, was that additional taxes on service fees will ultimately be transferred to the consumer and eventual deplete the gains made by mobile money, and also derail the prospects of riding on mobile money to build the digital economy.

The Vice President on that occasion upheld the position that mobile money operators already paid corporate taxes on their earnings from the service, and placing additional taxes on their service fees would be government shooting own self in the foot, because mobile money is the single most powerful key to the success of the digital Ghana agenda.

Mobile technology in general and mobile money, in particular, is the one element without which this whole digital transformation journey would not have even taken off, much less lead to anywhere. Indeed, the whole digitalization drive starts and ends with mobile money, and the Vice President's 65-page, almost 90-minute-long lecture could not have highlighted that fact any better.

Key elements of Ghana's digital economy

Tell me what the key elements of the digital Ghana agenda are, and I will tell you how almost every one of them is dependent on mobile money.

Per the Vice President's lecture, the key elements of Ghana's digital economy, as of today, are the unique national ID, digital address system, Ghana.gov, domestic revenue mobilization/tax collection, births and death registry, property taxes administration, land administration, driver and vehicle licensing, motor insurance, e-pharmacy, national health insurance, paperless port, healthcare delivery, medical supplies delivery, mobile money interoperability and probably many more. Practically, about 80 to 90% of the elements would not have achieved their intended purpose without mobile money. It is that simple.

Let's break it down:

MoMo Interoperability

It is natural to start from the element that was actually named after mobile money. It is called Mobile Money Interoperability (MMI). The name was for a reason. Mobile money is the one big service that gives relevance to the platform and makes the investment into it worth the country's while. Dr. Bawumia has for many years, stated that through MMI, government has been able to create over 15 million bank accounts in the hands of Ghanaians who otherwise did not have bank accounts with the traditional banks. This is the single biggest success story for another element of the agenda, financial inclusion. It means several people who could not have access to banking services hitherto, now do. And there are several banking and financial services on the mobile money platforms, such as loans, investments, savings, insurance, remittance and more.

At the end of the second quarter of the year, for instance, reports from the Ghana Interbank Payments and Settlements Systems (GhIPSS), custodians of the MMI platform, indicates the combined wallet to wallet, wallet to bank and bank to wallet transactions saw the highest percentage growth on the platform, even though in terms of volumes and value, it is not yet the highest. What matters here is the adoption and usage of mobile money and MMI, and what it means for financial inclusion. A report by Juniper Research this year, has showed that globally, card and cheque payments are giving way to electronic payments, and soon card payments will be toppled. In Ghana, mobile money is the number one driver of that transition.

Staggering MoMo transaction volumes

At this years' Ghana Information Technology and Telecom Awards (GITTA), Minister of Communications and Digitalization, Ursula Owusu Ekuful disclosed some very staggering third quarter 2021 mobile money transactions figures. According to her, market leader MTN recorded an overwhelming 1.085 billion plus transactions in those three months alone. Over the same period, Vodafone recorded over 120 million transactions (thanks to their free transfers to all networks), and AirtelTigo recorded over 68 million transactions. In total, we are talking about some 1.27 billion plus mobile money transactions in three months.

The Minister noted that the figures are millions of miles above regular bank transactions over the same period. And that, coupled with the fact the mobile money operators have the biggest network of merchants across the country, numbering over 400,000, mobile money is by far the one element that government can depend on to deliver on its digital Ghana agenda smoothly and quickly.

MoMo and Uniqueness of GHQR

Closely related to mobile money is the GHQR platform, also hosted by GhIPSS. It is a channel for electronic payments in larger values than what regular mobile money wallets can do as of now. Elsewhere, QR codes are linked to bank accounts and so whatever money is paid via that channel goes into the receiver's bank account linked to the QR code. But the uniqueness about the GHQR is that it also allows merchants to register a mobile money wallet on the platform and receive funds into that wallet. This is a novelty. It is not done anywhere else in the world. Again mobile money, by its sheer size and penetration in Ghana, made that possible. This is true democratization of digital finance and payments, otherwise known as financial inclusion.

MoMo and e-Cedi

Soon Ghana will be launching its own Central Bank Digital Currency (CBDC), code-named e-Cedi. It is fiat money and legal tender like physical cash, but it is digital. e-Cedi has its own advantages for the country. According to the Vice President, it will, for instance, help to curb the many bullion van robberies in the country, because cash will be moved in digital form rather than physical form. It will also help to reduce lending rates on bank loans because loans given will still remain in the banking sector in its digital form for investments, so banks can afford to offer lesser interest rates.

But the e-Cedi will not have been of much relevance to ordinary Ghanaians without digital wallets; and mobile money wallets are by far the largest group of digital wallets in the country right now. At the last count, there were over 11 million mobile money wallets in Ghana. Bank of Ghana has said it is not going to establish dedicated digital wallets for transacting with e-Cedi and that is mainly because mobile money in particular, and other digital wallets are already providing that services.

On their own, the mobile money operators in collaboration with loads of fintech companies, who are only in business today because of mobile money, have created a number of very reliable payment architectures that gave government the confidence that the technology to deal with what the Vice President called the "demons and principalities" in the public sector revenue mobilization and tax collection system exists in Ghana.

Now Ghanaians are able to pay water, electricity, pay TV and other regular bills with mobile money. So on the back of mobile money, working through the various domestic payments technologies, government has established the Ghana.gov platform as a place where government interfaces with anyone needing a service from any government institution.

On Ghana.gov, anyone can apply for any government services online and pay for it digitally, using mobile money and other digital wallets. So, anything from passports, births and deaths certificate, driver and vehicle license, national health insurance card and many other government service, can be applied for and paid for online, thanks to mobile money and its offshoots.

MoMo and GRA Taxpayer App

A key component of the Ghana.gov architecture is the tax collection feature. Now the Ghana Revenue Authority (GRA) has a dedicated app - GRA Taxpayer App - that allows Ghanaians to easily file their tax returns on their mobile phones and pay their taxes using mobile money. In fact, if one qualifies for tax refunds, it will be paid via mobile money. One can even obtain a tax clearance certificate on same platform. The app is available on both Android and Apple stores.

Ghana.gov was designed by three local fintechs - Hubtel, ExpressPay and IT Consortium, and JBA would like to congratulate them for the great job they have done, and also give thumbs up to the government for believing in local innovation at that level. Recently, the communications an digitalization Minister expressed worry about Ghana's digital infrastructure being in the hands of expats. But with companies like those three owning and running Ghana.gov, we are confident that infrastructure is wholly Ghanaian.

MoMo and Property Tax

Again, on tax collection - one of the revenue streams that has been in complete shambles in Ghana for decades, is property taxes. According to the Vice President, currently, property taxes are paid on only 9 per cent of properties in the country, all because the architecture to run an effective system was not existent. But with the launch of mobile money interoperability and other elements like digital address system, Ghana.gov and Ghana Card, government has established National Common Platform for Property Tax Administration, to be implemented by all MMDAs. What that means is that, a database of properties and property owners will be kept and their bills will be sent to them periodically, and they can pay via mobile money and receive a digital receipt on the phone instantly.

In line with that, the platform would also help to manage land administration in the country and make it possible for individuals to register, buy and transfer land online and pay with mobile money directly into the account of the Lands Commission. All these cut out the middle men, who end up pocketing money meant for the state, if the money is paid in cash. Company registration has also been digitalized to enable prospective business owners to register online and pay for their service digitally.

The second part of this article will focus on MoMo and NHIS, e-Pharmacy, DVLA, and SIM re-registration. It will highlight MTN's unique contribution to the sector and throw in a few suggestions from JBA on behalf of the consumer.