In the past few years in Ghana, two popular words have surfaced when it comes to payments and they are “Mobile Money”. In a country where 7 out of 10 people are without bank accounts but yet have more mobile phones than people, (due to multi-sim users), what role can mobile play in impacting our nation’s growth and development?
Financial Inclusion: Between Circle and Adabraka, you are likely to come across 5 different banks yet only 3 out of 10 Ghanaians have bank accounts. The birth of mobile money along with the recent partnerships between banks and telcos in Ghana have made great strides in reaching the unbanked sections of society. Since 1 out of 5, Ghanaians use mobile money banking regularly, free movement of money in the economy that hitherto was hoarded by the unbanked and exchanged just a few hands will be enabled. The movement of money in the economy through mobile money banking will equally affect credit availability because these monies from mobile money transactions end up in the banks and work hand in hand with the telecom companies. The ability to link one’s mobile number to a traditional bank account may further encourage the unbanked to open bank accounts with the confidence that their monies will still be in their “pockets” in the form of a mobile wallet.
Micro Insurance penetration: With Ghana’s insurance penetration to GDP hovering a little below 2%, the use of mobile phones does not only have a place for banks but also a place for the insurance industry as well. In recent times, some telecom companies offer a form of microinsurance via mobile by providing life and health insurance covers to willing phone subscribers. This is made possible through agreed and controlled data sharing between telecom firms and traditional insurance companies who underwrite the policies. One can send a message to a short code and pay a flat rate per month through a direct mobile money monthly debit and enjoy health insurance or life cover. This innovation in insurance in the mobile money sector puts in place a positive outlook for the future of insurance in Ghana. It will also help improve healthcare service delivery in the nation if millions subscribe to this coverage monthly. Imagine 20 million phone users signing on to a minimum GHS5 a month for a GHS1000 hospital bill cover. The income generated by these subscribers will be at least GHS100 million a month and at least GHS1.2 billion a year. If the mathematics of the fund is managed well by actuaries using good data, mobile money could rejuvenate life and health insurance in Ghana. These funds could equally be invested and turned around to earn higher returns in order to positively stabilize the economy.
Employment: The impact of mobile money on employment is a blessing and curse, but more of a blessing. With increased automation of money transactions, certain roles of traditional brick-and-mortar banks will grow dysfunctional, causing a possible retrenchment in areas that have been taken over by mobile and online banking. Imagine, where would the 72,000 mobile money agents littered across the country have been if the innovation of mobile money had never seen the light of day? The private sector through mobile money has hence helped the nation solve the menace of unemployment to a degree.
Tax revenue generation for the State: The government of Ghana relies on funds from various sources in national development and one of these is tax. The generation of transactional taxes from money transfers, corporate taxes from telecom firms, and income tax from commissions of mobile money agents all help drive the developmental agenda of the nation. This is a positive impact indeed for a developing nation like Ghana. One can be assured every successful transaction done via mobile money contributes a quota to national development through tax.
Avenue for financial cybercrime: We cannot speak about the positive impact of mobile money without the threats it also presents. One such key threat is the avenue mobile money creates for financial cyber fraud. Lately, issues of fraudsters hacking or attempting to hack into mobile money subscribers’ accounts are becoming a menace. People of ill motives are devising various means of getting subscribers’ passwords and some successful cases result in huge aggregate sums of money. This issue of mobile money fraud can in the end lead to mistrust of the financial platform and it could result in the possible collapse and lack of interest in the mobile money sector if firm steps are not taken. Because risk presents an opportunity, cyber and financial risk experts can equally take advantage of this to serve as consultants in telecom firms to ensure the financial integrity and safety of the mobile money subscriber are maintained.