mfinance: is it a case of collaboration or disruption University of Stellenbosch, Kweku Koranteng

What do you know about Ghana? What is the colonial name of Ghana? What is Ghana’s major export crop? Gold Coast Cocoa

Introduction mfinance: is it a case of collaboration or disruption Innovation within the telecommunication sector? [Fixedline, Voice/SMS, Data and mobile finance] Is disruption a function of innovation? 80s90s 2000s 2010s Fixedline Mobile Internet/Data mfinance CopperWireless technologies 2020s Fiber USSD

Context of Ghana ItemIndicator Mobile Phone Penetration in % Mobile Internet Subscriber in % Fixed line Penetration in % Household Mobile Access in % Number of MNOs6 Mobile Money Services4 MMW Subscriber %-25% Number of Banks and Financial Institutions 728 Population with Bank Accounts 30%-35% Population27million

How is the financial Sector of Ghana Structure? Background [Banks] Banks of Ghana Bank of Ghana Universal Banks Other financial Inst. MNOApex Banks Rural Banks The financial Sector in Ghana is composed of 27 commercial banks, 60 non-bank financial institutions (NBFIs), 138 rural and community banks, 503 licensed MFIs

Ghana’s Telecommunication Market OperatorSubscription VoiceData MTN 46.0%48.0%. Vodafone 23.0%18.0%. Tigo 14.0%15.0%. Airtel 12.0%14.0% Expresso 0.4%0.3%. Glo 5.0%4.0% 31,154, ,106,218 Voice and Data Market Share-Ghana Source: NCA (2015)

What the figures say about MM use and Bank Accounts BANK ACCOUNTS Own Bank Account 34% Own or Have Access to Bank Account 36% Active Bank Account User (Past 90 Days 24% MOBILE MONEY USE Have Ever Used MM 29% Active MM User25% Registered MM User 20% Registered Active MM Users 17% Source: FII Survey of Ghana, conducted December 2014-January 2015; sample size=[3,002]

Mobile Money Prospect from

Banking Vrs Nonbanking(EMIs) High Capital Requirement Ability to engage complex financial instruments eg, loans, mortgage, investment A much flexible regulatory regime Limited number of banks in comparison to the nonbanking sector Lower Capital Requirement Stricter regime with limited investment options Micro management by regulators Other active financial models competing within the same space (Microfinance, Rural Banks)

Regulatory Background The Branchless banking guidelines of The policy defines branchless banking as the provision of banking services outside of bank branches using information and communication technologies (ICTs) and non-bank actors such as grocery stores, pharmacies, and mobile network operators. Only banks are permitted to lead branchless banking schemes, although they may partner with mobile network operators (MNOs).

Source: (Idongesit, 2013)

Game Changing Policy Guideline E-Money Issuers Policy July 2015 Create an enabling regulatory environment for convenient, efficient and safe retail payment and funds transfer mechanisms. They promote the availability and acceptance of electronic money as a retail payment medium with the potential to increase financial inclusion and specify necessary safeguards and controls to mitigate the risks associated with e-money business and ensure consumer protection safeguards.

The Character of the E-Money Issuers Policy a.Promote financial inclusion without risking the safety and soundness of the financial system; b.Extend financial services beyond traditional branch- based channels to the domain of everyday transactions; c.Ensure that electronic money is only provided by a.financial institutions regulated under the Banking Act, 2004 (Act 673) or b.duly licensed non-bank entities; d.Ensure that customers of e-money issuers benefit from adequate transparency, fair treatment, and effective recourse.

Why should E-Money pose a threat to Bank 1.Banks are slow to adapt in comparison to MNO’s 2.ICTs are notorious for disruption (adapt of die adage) 3.MNO business models are evolving from basic physical infrastructure to content creation. 4.Banks do not have patience for small money (sachet money) 5.Concerns of MNO evolving into full fletched Banks (Two-sided Market model)

Take Away Discussions 1.Can inclusive financing drive growth at the bottom of the pyramid? 2.What role can government play in engendering this ecosystem beyond the provision regulation and guidelines? 3.How can nascent ICT entrepreneurs explore opportunities in this emerging ecosystem?

Q and A Section Thanks