Ghana vs Kenya, who wins the mobile money agenda?

Economies in Sub-Saharan Africa are fast embracing digitization to remain relevant and improve efficiency in this fast-paced global economy.

With a high population size, large market demands and complicated consumer preferences, all economies in the region have no choice than to adopt new ways of ensuring the core of financial transactions is made efficient.

This has brought about the digitization of payment systems across some African economic zones with Ghana and Kenya leading the charge.

In the case of Ghana, financial inclusion has leapfrogged with the advent of mobile money interoperability. 

According to the Bank of Ghana, mobile money interoperability soared by 34 per cent in the first quarter of 2019 as compared to 2018. Detailed figures show that actual volumes of mobile money transactions increased from 104 billion Ghana Cedis (18 billion dollars) in the first half of 2018 to 140 billion Ghana Cedis (a little over 24 billion dollars) in the first half of 2019.

The Vice President of Ghana, Dr Mahamudu Bawumia, commended for his contribution to the flow of mobile money interoperability, had remarked to the media that “this trend of digitization has plucked the loopholes to corruption and inefficiency”. The use of mobile money services has permeated every scheme of financial transaction from the payment of school fees to even utility bills.

Market women and food vendors in Ghana, who hitherto were considered the laggards to this new financial system, have increased their profitability by over a hundred per cent in the last half of the decade.

With threats of corruption looming across Ghana’s public institutions, the Vice President had directed that all financial transactions be made digitally from the start of the new decade.

What this means is that all public institutions in Ghana are no longer accepting physical cash as a mode of transaction – a strategic move by government also expected to complete Ghana’s trajectory of being a cash lite economy.

Despite gains made in improving and expanding financial inclusion through mobile money, recent introduction of large denominations by the Central Bank has left many economists concerned – questioning the commitment to a digital economy.

Meanwhile, the Governor of the Bank of Ghana, Dr Ernest Addison, insists that the 200 and 100 Ghana Cedi notes are aimed at minimizing large transactions and also easing the burden on the 50 and 20 Ghana cedi notes.

A look at Kenya’s mobile money ecospace shows tremendous growth and impressive performance. To start with, the World Bank has remarked that the East African economy “is the highest user of mobile phones for money transactions in the Sub Saharan Africa region”.

Figures from the World Bank and International Monetary Fund (IMF) show that 68 per cent of adults in Kenya use mobile money for their various transactions. This is against the average of 54 per cent in Ghana.

Daily transactional volumes of mobile money transactions in Kenya was recorded at 38.5 billion dollars by the close of 2018. What this means, according to the Central Bank of Kenya, is that the country records an average of 108 million dollars of mobile money transactions daily.

As it stands now, mobile money transactions every year far outweighs the entire calculation of Kenya’s Gross Domestic Product (GDP).

Be it all as it may, the stakes are very high for all Sub-Saharan economies to not only digitize, but also put the needed structures in place to deal with the threats of cybersecurity. 

Reducing corruption and improving efficiency remain the core of digitization and for economies like Ghana and Kenya, the avid race to completing the circle of financial inclusion remains highly plausible and encouraging.