The Vice President, Dr. Mahamudu Bawumia has observed that the world is increasingly tilting towards cashless economy and systems and that it is important that “we move toward electronic transactions like is done in Sweden”.
“Increasingly many jurisdictions around the world are also going cashless, it is the case that for example by the end of next year in Sweden, no cash will be accepted and that is going to be by law. Zero cash, every transaction in Sweden will be electronic”. Vice president Dr. Bawumia said
The Vice President earlier delivered a public lecture on Ghana’s digital economy and how the government has used digitization to achieve many milestones at Ashesi University said “one of the biggest problems that was impeding financial sector development in Ghana is the issue of financial exclusion”.
This he explained meant that most of the population is excluded from fully participating in the financial system because they are unable to open and operate bank and financial services accounts which reinforces the dominance of cash payments.
“When we assumed office in 2017, we decided to use digitalization to solve this problem. The data showed that 70% of people in Ghana had no bank accounts but 80% of the adult population had mobile phones with 30 million mobile money accounts. It was also not possible to send money to customers of different mobile money service providers. So, we asked the following questions: why can’t we make it possible to send mobile money across different mobile money service providers and also why can’t the mobile money account function like a bank account ‘by making it interoperable with bank accounts? The answer to these questions was the implementation of the ground-breaking mobile money interoperability system”. Dr. Bawumia stated
He continued that “mobile money interoperability has made it possible to transfer money seamlessly across different mobile money providers and between bank accounts and mobile wallets. Today, because of mobile money interoperability (MMI), you can transfer money from a customer of one mobile money service provider to a customer of a different mobile money service provider and also make payments from your mobile money account into any bank account and you can receive payments from any bank account into your mobile money account. Because the mobile money account performs just like a bank account, as a result of MMI, we have practically solved the problem of financial exclusion in Ghana”.
Also, Dr. Bawumia noted that “Ghana is the first country in Africa and one of the few in the world to achieve this type of interoperability between bank accounts and mobile wallets. Even in the USA, the Federal Reserve Bank does not have interoperability in its Real Time Payments Network. The American Bankers Association in a letter to the Federal Reserve (Fed) in September 2021, called on the Fed to strive towards interoperability with the Real Time Payment Network.
Achieving mobile money interoperability (MMI) in Ghana is therefore no small feat, especially at the cost we did it. The data shows that because of MMI, Ghana is the fastest growing mobile money market in Africa.
Banks are also responding to the competition for the unbanked from the mobile money service providers. Next month, all banks in Ghana will launch a bank wide mobile money wallet which will be available to customers and non-customers through a mobile App. It is similar to other mobile money Apps from Vodafone, Airtel TiGo and MTN. Users of the App will be able to move money from any bank or mobile money account into this wallet”.
Consequently, the vice president said “I think this will bring about a healthy competition between the mobile money service providers and the banks for the mobile money business. Today, the payment system reforms we have put in place has made it easy to open a traditional bank account. For many banks, anyone can open a bank account remotely through their mobile phones without visiting a branch or filling out forms. Clients need only a valid national ID card and no additional documentation to open an instant account. As stated earlier, in the informal sector, which is dominated by cash payments, most merchants are reluctant to accept other forms of payment for reasons of cost and convenience.”
According to Dr. Bawumia, “to address these challenges, we have recently rolled out a Universal QR CODE payments system which allows all merchants and service providers as well as individuals to receive payments instantly on their phone as customers scan their QR CODE or dial a USSD code for “yam” phones. The Universal QR CODE is very conducive for merchants because all they need is a mobile phone and not a POS device to operate. Also, when payment is made, they receive the money instantly in their bank or mobile money account and get a notification on their phone. While QR Code payments exist across the world, a Universal QR Code system (where all banks, mobile money service providers and fintech’s are on one platform with interoperability between bank accounts and mobile wallets) is a rarity. Ghana is the first country in Africa to implement such a Universal QR Code payment system”.
“To deepen the digitalisation process, the Bank of Ghana has started the process to launch a central bank digital currency (CBDC), the e-cedi, next year. The e-cedi is simply the digital form of the physical cedi in circulation. It is legal tender issued and backed by the central bank. It is not a cryptocurrency. With the digital currency, citizens will hold currency in the form of a digital wallet. When the e-cedi is fully adopted, the incidence of fake or counterfeit currencies and bullion van robberies should be a thing of the past”. Dr. Bawumia stated
However, since the introduction of the controversial E-LEVY which simply means electronic levy, the vice president, Dr. Bawumia who is known to consistently promote electronic transaction is yet to make a public comment on the brouhaha surrounding the e-levy.
The electronic-levy is a new tax measure introduced by the government in the 2022 Budget on basic transactions related to digital payments and electronic platform transactions, which includes financial technologies platform (FINTECH), E-Banking or Online banking and Mobile Money Payment gateways and platforms.
The new electronic levy of 1.75 per cent will be applied to transactions that are more than GH¢100.00 on a daily basis (24 hours)
This has been scheduled in such a way that with every transaction of GH¢100.00 by a user, the E-levy deduction to government has to be applied.
The electronic levy consists of All Person to Person (P2P) mobile transactions (i.e the sending of funds to another account, payment for goods and services, payment of utilities (please note that payments for government fees and charges; are exempt), and All Business-to-Business B2B Mobile Transactions.)
All points of service (POS)/merchant payments; and all inward remittances (to be borne by the recipient) are included.
