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Telecoms and transactions ghana's financial services are set for further standardisation of the mobile money market


aving realised the huge volume of cash transactions handled by the country's four out of six telecom service providers MTN, Tigo, Airtel and Vodafone - through their mobile money services, ARB Apex Bank, which is run by Bank of Ghana (BoG), has moved in to set guidelines for their operations. According to Apex Bank, the number of mobile money transactions grew from 30m in 2012 to 106m by December 2014. The values were GH¢171mn (US$43.48mn) in 2012, GH¢2.4bn in 2013 and GH¢11.6bn in 2014. MTN premiered mobile money services in 2009, initially offering services such as money transfer and airtime top-up, and now has 4.8mn registered customers, 19,500 merchants handling 18.5mn transactions. New ways of working With the new guidelines, both the number and value of transactions are set to multiply as analysts believe they will facilitate the expansion of financial services to millions of unbanked citizens and help capture financial transactions within the informal sector. One of the major differences between the old and new guidelines is that mobile operators will require a license to become dedicated emoney issuers (DEMIs). They will own and manage the electronic money business using retail outlets and agents, extend coverage of their services and be supervised by the BoG. The 'E-money Issuers Guidelines' and 'Agent Guidelines' is therefore meant to create an enabling regulatory environment for convenient, efficient and safe non-cash retail payments and transfer of funds. The new guidelines, developed with key stakeholders including the Ghana Chamber of Telecommunications (mobile operators), the banks, payment service providers and other prospective electronic money issuers gave the telcos engaged in the mobile money service up to six months to establish a separate business entity to handle these services. The guidelines, which became effective in July 2015, stipulate, "Nonbanks that have previously been offering mobile financial services in partnership with banks must apply within six months of the coming into effect of these guidelines, for a license in order to conform to the new framework." An objective for these guidelines, according to the central bank, is to "ensure that electronic money is only provided by (a) financial institutions regulated under the Banking Act, 2004 (Act 673); or (b) duly licenced non-bank entities which are engaged solely in the business of e-money and activities related or incidental to the business of e-money, and which are regulated and supervised by the Bank of Ghana." The e-money issuers, the central bank said, 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 emoney business and ensure consumer protection.


African Review of Business and Technology - April 2016

The guidelines further categorised customer e-money accounts into various groups which define their maximum daily and monthly transactions and also stipulated an aggregate limit on cash-out and outbound payments. However, the transaction limits can be amended where applicable as the bank itself pointed that, "For very large companies where even these limits would be overly restrictive, an approval to supersede these limits may be granted...on a case by case basis upon receipt of application from the EMI justifying the need, proposing a revised set of limits, and providing business information supporting the proposal," the guidelines stipulate. The central bank however cautioned that, if approved, EMIs are strictly obliged to ensure the revised limits for each merchant are continuously adhered to. "If the Bank of Ghana perceives that this privilege is being abused, it will prescribe rectifying action for the EMI and may ultimately revoke the privilege," the central bank warned. Clarity amongst the competition According to the chief executive officer of the Ghana Chamber of Telecommunications, Mr Kwaku Sakyi-Addo, one consequence of these guidelines is that mobile money services would receive a major boost in the near future from integration and interoperability of the various mobile money platforms, allowing transactions between networks. Speaking at a dialogue on mobile financial services he said in the wake of the issuance of the guidelines for mobile financial services, and in light of the promise shown by the sector, the industry would consider making this feature available in the future. "In the last few years, in the absence of clear guidelines from the central bank and considering that mobile financial services were just taking off, the mobile operators were essentially focusing on growing their customer base but now that there is a bit more clarity with the emoney issuer and agent guidelines, I think that we are going to see in the coming months and years, this bottleneck addressed," the CEO said. There are currently four players in the sector - MTN, Tigo, Airtel and Vodafone. The service in Ghana however lags behind countries like Rwanda, Uganda, Tanzania, and Kenya due to the lack of interoperability and other challenges. However, Peter Zetterli, a financial sector specialist at the Consultative Group to Assist the Poor (CGAP), who is the country lead for Ghana on financial inclusion, believes that forcing interoperability too early could stifle the sector because telecom companies will have no incentive to make the investments necessary to lay the foundation, and the mobile financial services sector would be better served allowing telecom companies the freedom to invest and reap the benefits as they do. ■ Kafui Gale-Zoyiku

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African Review April 2016  

African Review April 2016