The African Development Bank projects a growth trajectory for Ghana’s economy, bolstered mainly by higher oil and gas production, combined with increased private sector and public infrastructure investments, as well as an improved macroeconomic framework and political stability.
Ghana’s strides in economic growth are, not surprisingly, coupled with efforts, led by the Bank of Ghana to boost the country’s financial services sector. A robust electronic payments ecosystem is one of the main conduits through which financial inclusion for Ghana’s unbanked and under-banked population can be achieved. By providing access to key financial services such as credit, insurance, savings and more, people that enter the financial fold can contribute to the economic growth of the country.
In a market place where cash is considered king and 91 per cent of transactions carried out are in cash, convincing the population to move from this status quo is no doubt a challenge; however it is not impossible.
Solving for financial inclusion, and making the switch from cash to cashless is not a one-size-fits-all proposition, nor can it be achieved overnight. There are barriers to the widespread provision of financial services such as the lack of formal identity documentation, challenges banks face in serving poor and often remote populations and the need for improved financial literacy.
We do believe that it takes an ecosystem approach to encourage the adoption of electronic payments. There is no single stakeholder in the value chain that can drive financial inclusion alone, deliver a full suite of solutions, and provide consumers with adequate financial education materials.
How then does Ghana stand to gain from going cashless?
Financial success and financial inclusion are inextricably linked. Inclusion matters because it’s an avenue through which increased prosperity can be shared and become more equitable and sustainable. An exclusive economy poses much risk for Ghana. The 65.4 percent of Ghanaians that currently lack access to financial services are left without services that most of us take for granted: an ability to save money for a rainy day, obtain insurance for their livelihoods, and much more. This is why financial success and financial inclusion are indivisibly linked.
Electronic payments can ease the significant inefficiencies associated with cash that many SMEs face. Small and Medium Enterprises have unique needs, which electronic payments are able to cater to. According to a study by MasterCard Advisors, 90 percent of small-to-medium-sized merchants have an e-commerce presence. However, only 20 percent can take live orders and process payments. It is a daunting gap, especially when stacked against the technology profile of retailers that transcend borders and platforms.
Ghana will achieve success in converting consumers from cash to cashless by enhancing the efficiency of its national payment systems and providing easy access to infrastructure that supports cashless transactions.
Imagine walking to the kiosk to get your morning groceries and using your card rather than cash to pay for these items. Convenience is not just about being able to use your card at large retailers at Accra Mall; it’s about being able to use it wherever you go. Convenience is not for the few who can shop where the Point of Sale terminals are, which right now is in middle to upper class establishments: convenience is for everyone. There is need to ensure that there are no impediments stopping consumers from using their cards to make purchases of say, less than thirty Ghana cedis.
Financial deepening will pay a critical role in making this a reality. Although deepening delivers most of the development benefits of financial inclusion, affordability stands as a barrier to achieving this. As it stands right now some financial services offered in Ghana are costly, largely due to insufficient volumes for banks to cover their fixed costs. Only radical efficiency improvements can make high volume/low cost payments feasible.
Africa has immense strategic importance to MasterCard. We envision a world beyond cash and to achieve this we are joining forces with key stakeholders such as the Bank of Ghana, telcos, financial institutions, merchants, small businesses and nonprofit organisations, among others.