Fwd: Beyond the Bank: The Rise of Mobile Money in Ghana

As the number of mobile phone subscribers in Ghana increases, so does the market for mobile money services. The majority of Ghanaians lack any formal bank account. Kwami Ahiabenu II reports on how mobile money could change the shape of financial transactions in the country.

By Kwami Ahiabenu II

An estimated 80 percent of Ghanaians are "unbanked" – meaning they conduct their transactions outside the banking sector with no access to financial services. Products like "mobile money," that enable safe and secure money transfers without the use of a bank account, could have a major impact on this unserved segment of the population. Mobile money gives anyone with a mobile phone the ability to transfer money, make cash payments and conduct other financial transactions over the phone.

Mobile money is a relatively new phenomenon in Ghana. It was first introduced by the telecom company MTN a year ago. MTN Mobile Money operates in partnership with nine banks. Currently, more than 2 million Ghanaians are registered as active users. MTN expects this number to grow as a result of the resources they have committed to educating subscribers about switching from the traditional mode of cash payments to electronic payments. Earlier this year, Zain became the second mobile operator to provide mobile money services through the introduction of ZAP, working with three banks.

How Will Mobile Money Help Ghana?

With more than 15,000,000 mobile phone subscribers in Ghana, the potential market for these new services is significant. Mobile money presents certain advantages for Ghanaians without access to banks. It reduces the transaction costs of financial services for the poor, especially those in rural areas where financial services seldom exist. Mobile money saves the cost of travel and time spent visiting the nearest town to access financial services. As noted in AudienceScapes research , mobile money provides people with a way to transfer money safely and keep (or even increase) their savings.

Mobile money has the potential to create jobs directly through hiring in the mobile phone companies, partner banks and the more than 4,000 merchants involved in Ghana's mobile money system. Key partners in the provision of mobile money services include commercial banks, mobile phone operator's shops, distributor shops and accredited agents.

Jobs may be created indirectly as mobile money contributes to growth in Ghana's business and trade. If deployed successfully, mobile money could help individuals harness funds outside the banking system and channel them into the formal financial sector, thus making it easier to gather funds for investments.

Not surprisingly, the general manager of Mobile Money-MTN, Bruno Akpaka, sees many benefits for Ghana as it continues adopting this service. Akpaka believes mobile money will "help trade activities within the country and foster strong business partnerships."

"The creation of wide merchant footprints in places where traditional banks cannot go also contributes to bringing people into this new model of financial transactions," said Akpaka. "MTN Mobile Money is bridging this existing huge gap between the unbanked and the financial sector."

The Rise of E-Money Services

The introduction of mobile money service is taking place in isolation but in parallel with the advent and expansion of other financial electronic payments services. One of these is E-Zwich, an electronic platform that enables the loading and spending of electronic cash and also allows the settlement of inter-bank claims in addition to online transactions. Others are being made available over the Internet and through SMS-text messages.

The government regards these services as banking. They are strictly regulated and licensed by the Central Bank- Bank of Ghana under its branchless banking policy.

Both MTN and ZAIN SIM cards are enabled to utilize the service but each new subscriber needs to register for the service at before it is activated. Upon activation, the user is provided with a secure electronic "wallet" where funds can be disbursed or uploaded. The users can either exchange electronic money for physical cash (cash out) at shops, partner banks and accredited agents or make use of it in making purchases or transfers.

Enabling a Cash Flow to Rural Areas

In general, the most popular mobile money service is money transfer. The trend is for users in urban areas to transfer funds to recipients in rural areas. Traditionally in Ghana, city dwellers often send money to members of their extended family living in rural areas.

Other typical services include the purchase of mobile phone airtime, goods and services through electronic transfer of money from user's wallet to the merchant's account.

Commenting on money transfer via mobile phones, Carl Niikoi Ashie, an m-commerce (mobile commerce) specialist at Zain who works on ZAP, said: "The customers can 'cash in' by loading money onto their ZAP wallet, then send the money to someone else on their phone in a simple process. The person receiving the money can 'cash out' by going to any of our outlets and exchanging the e-value for physical cash. We're seeing tremendous growth in the service across the country, with more cash-in done in the major cities while cash-outs are seen predominantly in the smaller towns."

Ashie sees a lot of evidence that his product is reaching Ghana's unbanked. "Users do not need to have a bank account to use the service. Currently, there are a lot of monetary transactions that take place outside the confines of the banks and it will take a product like ZAP to fill the void while providing a secure, convenient and trustworthy channel of transaction," said Ashie. "Some customers have also requested products that will allow them to use their ZAP wallets for savings and hence enjoy interest on their savings, just as pertains in the traditional bank setting."
http://audiencescapes.org/ghana-mobile-money-branchless-banking-research-MTN-E-Zwich

Texts a New Tool in Guinea’s Historic Election

Mobile phones turned citizens into election observers in Guinea's landmark presidential election. The technology will also be used to help voters in the upcoming September run-off poll.

By Kwami Ahiabenu II

On June 27, 2010, Guinea held what is widely being hailed as the nation's first freely run democratic election since gaining independence in 1958. A run-off between the two presidential candidates earning the most votes will take place on September 19, 2010. Another first in this landmark election process is the use of mobile phone technology.

Mobile phones have become a preferred means of communication in Africa because they are convenient and affordable relative to other methods. Most countries on the continent are now recording the use of mobile phones by all key stakeholders in their elections: from electoral officials, political parties and individual candidates, to electoral security agencies, civil society organizations, and local and international observers.

Candidates use mobile phones to raise funds and campaign. Voters can use mobile phones to verify their registration information and correct it if necessary before going to the polls. Mobile phones are also used to inform citizens about voter registration, and to inform registered voters about when, where and how to vote. And, in Guinea, phones have been used as a tool for election observation.

"If you have a problem during voting, send a text message to 8080." During the first round of elections in June, this was the message that Guineans around the country received at public forums, on the radio and in newspapers. The message advertised an election-monitoring service based on SMS text messages. The SMS service used a short code number, "8080," which enabled all mobile users in Guinea, regardless of their mobile operator, to send election-related queries, comments and report problems. The service was implemented by a coalition of government, private and business partners. These included the nonprofit group Alliance Guinea, the African Elections Project, Guinea's National Independent Election Commission (CENI), mobile operators (Areeba, Cellcom, Intercel Guinee, Orange or Sotelgui) and African Business Services.

Commenting on the SMS election-monitoring service, U.S. Ambassador Patricia Moller said at a briefing before the June election: "The United States is committed to ensuring that these are the freest and most transparent elections in Guinea's history. This innovative initiative will help to make this vision a reality…By providing voters with the means to protect their vote, we have helped to place the future of their country in the palm of their hands. This technology will allow CENI, local and international observers, and security forces to respond to incidents in real time."

After voters went to the polls, Alix Davilmar of the Guinea-based African Business Services, the providers of the short code service, declared the service a success. Davilmar said: "We received about 4,000 SMS [messages] before the day of election and on the day of elections there were approximately 8,000 SMS entries. After the Election Day, over 2,000 SMS entries also came in. These messages were all posted online and distributed as e-mail alerts to election administrators and observers, international media, civil society organizations or the general public."

The election did experience some glitches, according to the Carter Center, a U.S. NGO with expertise in observing elections which was on the ground in Guinea. In a statement, the Carter Center described some of the problems observed, "Confusion about several important aspects of voting and counting procedures, delay in allocation of polling stations, and late delivery of essential voting materials negatively affected the quality of polling."

Despite these difficulties, the period following the election has been calm and the results respected by all parties. The Carter Center itself declared the elections a success and noted, "the elections were marked by broad political participation, a spirit of open campaigning, and transparency."

Now all eyes are on the September poll, as Guineans prepare for the country's return to civilian rule.

http://audiencescapes.org/texts-new-tool-guinea-historic-election-mobile-communications-carter-center

Ghana – land of Gold, land of technology-Overview of ICT Sector

Kwami Ahiabenu,II

Introduction

Ghana can be counted among leading countries in West Africa's information and communication technology (ICT) space; its industry is growing with new developments being recorded each passing day. In recognising the potential of ICTs as an important tool, the government and industry stakeholders are aggressively pushing to accelerate the growth and development of the country in all sectors. Ghana's Extractive Economy with weak Industrial Base

At independence, the Ghanaian economy was relatively robust and well supplied with natural resources, skills and finance with an average per capita income of US $600.(1957). Over time, however, the structure of the economy has not seen any significant change, it is still an extractive-based economy with gold, timber and cocoa constituting its main sources of foreign exchange.

Another key characteristic of its economy is a heavy dependence on international financial and technical assistance in all sectors, which has inevitably resulted in an enormous external debt portfolio. In order to tackle its mounting external debts, 2002 saw Ghana opting for debt relief under the Heavily Indebted Poor Country (HIPC) scheme, a World Bank and International Monetary Fund (IMF) debt relief initiative. As a result of the HIPC programme, Ghana will save a total of US$230 million annually in debt service costs over 2004-2013, according to IMF estimates. To deal with the growing levels of poverty, Ghana has also developed Poverty Reduction Strategy (GPRS) which chronicles its "agenda for growth and prosperity.

KEY ICT SECTORS IN GHANA AND INVESTMENT OPPORTUNITIES

If the performance of a stock exchange is a strong indication of a country's investment climate, then Ghana is an attractive prospect for those seeking a good return on investment. The Ghana Stock Exchange (GSE) is among the best performing markets in the world. In 2003, it outperformed the effective yield of the benchmarked 91 and 182 day Treasury bills with market capitalisation rising by 104% while market turnover in value terms was up 335%.

Furthermore there a rising number of entrepreneurs running a number of successful ICT and ICT-enabled businesses, a strong indication of the significant potential for growth of ICT enterprises in Ghana.

The ICT sector is enjoying sustained growth in key areas such as ICT training, internet service provision, business outsourcing processing, telecommunications and software.

Telecommunications
Telecommunications remains the top growth area both in the area of fixed and mobile telephony, though mobile telephony is the leader in this sector; currently there are two national fixed line operators in Ghana – Ghana Telecom (GT) and Westel.

Westel has not been able to meet its rollout obligations as a second national operator and the National Communication Authority (NCA) initially imposed a fine of a little over US $71 million on the company. While through government intervention the figure has being reduced to US$25milion, Westel continues to mount a court battle to avoid paying the fine.

Generally, GT remains the biggest ICT player in Ghana by the virtue of its combined fixed lines; mobile telephony, international bandwidth wholesaling and ISP service offerings.

Mobile Telephony
Long waiting periods for fixed telephony – in some cases up to a year - plus limited availability in most areas of the country, has fueled the rapid growth of the mobile telephony business in Ghana. With four mobile operators, namely GT (One Touch) Milicom (Mobitel), Scancom (Spacefon) and Cell Tel (Kasapa) servicing the needs of an estimated one and half million mobile phone subscribers. Spacefon remains the market leader with 800,000 plus subscribers. Furthermore, with the recent introduction of advanced mobile communications technology such as General Packet Radio Service (GPRS), the operator is able to offer multimedia services including Internet browsing.

Kasapa prides itself on being the most inexpensive provider of cellular calls. Its business model has to date proven to be highly successfully, cost effectively offering cheap call rates by avoiding the use of fancy technology. It remains the only non-GSM cellphone provider to date, relying rather on analogue technology, and offers free activation and starter packs.

Mobitel is Ghana's first cellphone company, and initially dominated the industry as a leader for some time prior to the introduction of competing operators. Unfortunately, it did not recognise that GSM was the driving force of mobile telephony, and thus it did not rush to implement the technology. Failure to capitalise on this market current cost it dearly as competitor Spacefon introduced GSM and subsequently took a very significant share of the market. In the interim, however, Mobitel has successful implemented its GSM system and it is working hard to gain market share.

With a strong sales drive, One Touch was dominant for some time, but the company has taken a decision to stop selling services to new subscribers due to lack of capacity on its switches. It recently expanded its network significantly and it is poised to take a healthy proportion of the growing Ghanaian cellular market.

Developing human capital for ICTs
Ghana has adequate human resources to drive ICT growth and development, but faces the well documented issue of the significant skills gap that persists in Africa, especially in the high level ICT skills area. This situation is compounded by a brain drain effect, where top professionals - including ICT-trained individuals – are lured away to First World countries. Currently there is enormous demand for ICT training, which presents a host of investment opportunities for entrepreneurs.

The ICT human resource landscape is characterised by four types of ICT training opportunities. At the upper level, tertiary institutions - mostly universities - are focused on producing computer science, engineering and information system graduates. In recent times, an increasing number of private universities have initiated operations in Ghana, with most providing ICT-based training, filling the training gap resulting from the lack of capacity of public sector universities.

The second type of training is competence-based instruction, which is aimed at producing specific ICT skills as required by industry verticals. This level of training is a niche market with few institutions offering services in this area; there is therefore a significant level of opportunity that can be tapped by appropriate providers.

The next level of training is end user training at the mass market level. There are a number of training schools providing service in this area; at this level the market is somewhat saturated.

A growing phenomenon is teaching computer literacy in schools. This opportunity carose as most formal schools in Ghana do not provide computer literacy. With many schools now outsourcing their training needs to third parties instead of developing their own computer centres, opportunities exist for providers of such facilities and equipment to address the market need for basic computer literacy at the school-learner level. The Ministry of Education is encouraging and working with such training schools, but it is constrained by lack of a policy to guide the process, as well as the absence of predefined ICT curriculum for the schools.

Internet Service provision
Internet service provision is also another area of considerable growth and opportunity in Ghana. There are a number of ISPs working under an industry body, Ghana Internet Service Providers (GISPA) which is working to regulate the provision of Internet connectivity on the country. The success of the body in regulating the industry has been demonstrated in a recent case where Ghana Telecom was offering cheap bandwidth through its ISP division, while selling at a higher price to other ISPs - GISPA successful negotiated price reduction to create a fair environment in which the ISPs could conduct their business.

Though a considerable number of end users make use of dial up Internet access, most Ghanaians tend to use the Internet at public access cyber cafes, which are dotted all over the country. However, due to high costs including that of bandwidth, most cyber cafes in Ghana are struggling to break even.

Outsourcing in Ghana and Software Development
There are a number of outsource service provider companies in Ghana, including Affiliated Computer Services, Rising Data Solutions, AQ Solutions and Supra Telecom.

However, Supra Telecom has closed shop, since its parent company in the US filed for bankruptcy.

Ghana is positioned to benefit from outsourcing business opportunities, but it must establish an enabling environment including a pool of high quality yet affordable English-speaking computer literate workers as well as an inexpensive telecommunication infrastructure. Generally, Ghana has a long way to go before it can call itself a true outsourcing location.

Local development of software is becoming popular with a number of software companies and consultancies providing solutions in this area; some are already exporting their products. Local software development, however, remains an industry in its infancy and therefore presents an area of potential growth.

Government ICT
The Ministry of Communication is the leading government organ responsible for ICT in Ghana and is charged with the responsibility of coordinating government use of ICTs. In 2002, it developed an ICT for Accelerated Development (ICT4D) policy which articulates the vision of transforming Ghana into an information-rich knowledge-based society and economy through the development, deployment and exploitation of ICTs within the economy and society. The key focus of the government is to create enabling environment to nurture the development of the ICT industry in the country.

Challenges facing ICT development in Ghana
Perhaps the most significant issue facing development in Ghana is a reality that confronts many African countries – it has a cash-based economy with limited development of its financial services infrastructure. With over 80% of money in circulation outside the banking system, finding affordable loans and credit is very difficult if not impossible. This situation has lead to the small scale nature of most ICT businesses since they are constrained in their capacity to expand. Furthermore, the size of the ICT market is relatively small since most organisations which can benefit from ICTs products and services are slow to invest in this area.

Lack of policy implementation, lack of telecommunications infrastructure and poor regulatory environments are also affecting the growth and development of the industry.

Ghana's ICTs industry is highy visible internationally with a lot of opportunities yet to be leveraged. It has chalked up many successes but there is a long way to go for ICTs to contribute significant to growth and development of the country and overtake the traditional resources exports which include gold, cocoa and timber.