Digitising Financial Services Key To Boosting Financial Inclusion

Ghana can drive financial inclusion further up if it takes advantage of opportunities to digitise payments in various sectors including government, agriculture, utilities, investments, insurance and savings, among others.

Digital technology is a major driver of financial inclusion in Sub-Saharan Africa, including Ghana and increasing digitisation across these sectors will further increase financial inclusion, according to the Global Financial Index 2017.

The report, which was launched in Accra on Tuesday, showed that Ghana had achieved a significant feat in boosting financial inclusion, with the share of adults with access to formal financial services accounts (either with a financial institution, bank or mobile money) increasing to 58 percent in 2017, from 29 percent in 2011.

However, the report said Ghana still had a way to go in order to catch up with a country like Kenya, where account ownership is above 80 percent, with mobile money dominating.

Ms Dorothe Singer, Economist, Finance and Private Sector Development Team of the Development Research Group at the World Bank, who presented highlights of the Global Findex 2017, said Ghana was one of the success stories in Sub-Saharan Africa.

'Forty-two percent of adults in Ghana have accounts with financial institutions, up from 35 percent in 2014, while 40 percent have mobile money accounts, up from 13 percent in 2014,' she said.

However, she said gaps still remain in financial inclusion across gender, with women less likely to have bank accounts than men.

The gender gap for Ghana stands at eight percentage points, compared to a sub-Saharan Africa gender gap of nine percentage points, and better than Cote d'Ivoire and Nigeria, which has gender gaps of 11 and 24 percentage points respectively.

Gaps also exist across other demographics, with account ownership lower among poorer, younger, and out of work groups.

Ms Singer stressed that technology and digital financial services could help to reduce these inequalities in financial inclusion, particularly mobile money accounts.

At the same time digital payments are increasing in developing countries with 44 percent of adults in these countries and 49 percent in Ghana specifically, making digital payments in 2017.

However about 1.7 billion people globally and seven million in Ghana remained unbanked.

In Ghana, 45 percent of unbanked adults have mobile phones, which means they have the technology that presented huge opportunity for increasing financial inclusion.

Digitising payments was therefore an important way to boost inclusion.

About 300,000 unbanked adults in the private sector Ghana for instance still receive wage payments in cash.

Also, a large part of agricultural payments (900,000 adults) to farmers and others in the value chain are still received in cash, presenting a huge opportunity for digitising financial service.

Utility payments also present an opportunity for digitisation and increasing financial inclusion as 2.5 million people in Ghana who have accounts still pay utilities in cash.

Mr Godwin Anku, who represented Mr Ken Ofori Atta, Minister of Finance, said Ghana had developed a financial inclusion strategy and had mobilised resources to begin implementation of the strategy from September 2018 to 2024.

He noted that the improvement of financial inclusion was premised on improving regulatory environment of all the markets in the sector, including rural and community banks, and microfinance institutions.

It is also to establish linkages between savings groups and formal financial institutions, establishment of a credit rating agency and data centre and improving consumer protection and financial literacy.

He said government was committed to developing a digital financial system.

'One important element that can easily be identified in the implementation of the strategy is that Government is determined to harness the benefits of digitisation by developing a nationally inclusive digital payment as a first step towards the development of a digital economy,' he said.

He pledged government's commitment to take the lead by digitising its payments in order to post an effective fiscal operation, improve government security of government transactions and reduce waste and leakages.