Feature: Ghana's economy fast embracing digital transactions

by Justice Lee Adoboe

ACCRA, March 25 (Xinhua) -- Kafui Adzah can be called a tech-savvy entrepreneur in Ghana. She left her banking employment in 2012 to establish a cuisine business selling local dishes, including the popular "Wakye," boiled rice and beans served with chilly sauce.

What makes her business in Accra stand out is all her food is served by orders done through a mobile phone app and she receives money through Mobile Money and other apps.

The 33-year-old cooked food vendor told Xinhua she now hardly receives physical cash.

"I use Mobile Money and I receive my sales on it."

Adzah is not alone in this electronic cash transaction boom that is catching on in Ghana, with experts suggesting it would become a dominant factor in business transactions in the country in the years to come.

Mobile money services provided by telecom companies are helping improve deposit mobilization by the banking sector while removing major bottlenecks to financial intermediation.

Ghana's central bank reported that the value of the country's mobile transactions almost doubled last year to reach 155.8 billion cedis.

One of the mobile telecoms companies MTN reported that it had paid 71 million Ghana cedis or 16.01 million U.S. dollars as interest on deposits to Mobile Money account holders in 2017.

There is a growing convergence between Mobile Money services and commercial banks where bank accounts are getting linked to mobile money accounts for easy access.

Electronic transactions in Ghana come either through Mobile Money services or direct bank transfers through apps that link bank accounts with mobile phones.

Many of those who use electronic cash transactions said it is more convenient, swift and safe as it cuts down on time spent in banking halls, while protecting users against theft by pick-pockets and robbers.

"It is so convenient and secure; I don't carry cash home after work. And the buyer doesn't have to worry about carrying cash. Even my bank account, I monitor it electronically," Adzah said.

"Mobile money allows me to pay for services from any location, which hitherto, I would have had to go to the offices of the service providers to pay for. A typical example is the DSTV (a pay-per-view TV station) subscription," Emmanuel Dennis Dzorkpe, a contractor in Takoradi, said.

He added: "Then I have ready and easy access to my funds, unlike in the past when you would have to queue at banking halls to check on the status of your account or put up with faulty ATM machines trying to withdraw money."

In response to the trend, major commercial banks in Ghana are reportedly investing heavily in electronic banking platforms that enable customers to do transaction or manage their accounts through a mobile phone app.

This development, experts argue, will put a stop to the physical branch expansion drive that banks do at the moment in order to expand their service base.

"Within five years, most commercial banks would stop the brick and mortar expansion drive as digital transactions would become more effective tools for reaching clients," Arnold Parker, Managing Director of AFB, a non-bank financial service company, told Xinhua.

Parker said people with daily eight-hour jobs were beginning to realize that electronic banking was the way forward, prompting the banks to invest heavily in digital infrastructure.

Moreover, the micro-finance service operator said the digital financing would catalyze economic growth as projects do not get stalled.

"One of the things that worry us most is when we see uncompleted houses and projects. A lot of people try to buy land and it takes them forever to develop that. So once you have people beginning to have access to financing, what then happens is that their personal projects begin to be done with speed," he said.

"So that means that there is demand in the economy: people are buying cement, more blocks, employing masons, employing carpenters."

Parker explained that the integration of Ghana's financial market into the global financial market would also become a faster reality through electronic transactions.

Kofi Yamoah, Managing Director of Ghana Stock Exchange (GSE), believed technology is going to play a major part, whether in banking or other services, in the near future.

"So we all need to draw attention to it so that we don't necessarily think that if you want to expand as a financial institution, you must have 1,000 brick and mortar braches. You can still reach your customers by other means."

SECURITY PREWARNING

Yet like other countries that have seen an electronic transations boom, there have been rising concerns in Ghana over the safety of digital transactions.

On Wednesday, Bank of Ghana Governor Ernest Addison assured their resolve to protect the system as the banking sector has witnessed global cyber-attacks that resulted in disruptions to some critical financial services and destroyed financial assets and savings.

"The digitization of banking operations has engineered innovative financial products and expanded the scope of financial services alongside improved payments and settlement systems. These notwithstanding, the growth of technology-driven electronic payments are also associated with cyber-related risks such as insecure card data systems and identity theft."

"As policy makers and regulators, we will continue to exercise firm oversight of the payment system, monitor risks associated with digital innovation and develop appropriate regulatory responses without stifling innovation," the governor said. Enditem