Ghana has taken important steps toward digitising its economy and already has in place several of the building blocks of an inclusive digital ecosystem.

This according to the recently published 2017 country diagnostic report from the Better Than Cash Alliance.

The report assesses Ghana’s progress to date and sets out specific policy recommendations that can accelerate the country’s journey toward a more digital economy.

“Realising the potential gains offered by digitisation will help expand financial inclusion, boost government revenues, and drive new economic opportunities for Ghanaian individuals and businesses,” notes the report.

According to the Better Than Cash Alliance, the Ghanaian government is leading by example in digitising many of its own payments and continuously improving the regulatory environment. However, a number of key barriers must be overcome if the country is to drive forward its digitisation agenda.

The report found that 37% of the value of all payments ion Ghana is now made digitally. “The shift to digital payments is supported by good internet connectivity, levels of financial inclusion in Ghana above the regional average, expansive mobile money agent networks, solid payments infrastructure, and continuously improving regulation spearheaded by the Bank of Ghana,” it notes.

The government is also setting policy direction through ministerial statements and in digitising its own payments. 86% of the value of government payments is reported to now be digital. Digitisation efforts are expected to create savings of over GHS 250 million (approximately US$58 million) in 2017 and improved transparency.

The Alliance says digital changes already implemented have delivered significant cost savings and improved transparency, such as the removal of close to 50 000 ‘ghost’ names on the government payroll and pensions registry through the required registration of all civil servants on Ghana’s Social Security and National Insurance Trust biometric database.

Cash still prevails

However, the report notes that a vast majority of payments by volume are still being made in cash.

This report estimates that, even with this progress, 98.72% of the number of payments is still currently being made in cash, as individuals continue to purchase essential goods, including food, in the informal economy which relies on cash.

The strong preference for cash in Ghana is also a result of the high costs of digital payments that are often passed on to users (i.e., charging customers a fee to use credit cards), and a lack of trust in, or familiarity with, digital payments

In August, the country partnered with financial services corporation, Mastercard to smartly integrate technology into all aspects of the country's economy and establish a cashless Ghana, in a bid to become an African economic powerhouse.

According to Mastercard, globally, close to 85% of consumer payments are still made using cash.

The company said, "This is not only inefficient but leads to the lack of transparency as well as an environment where criminal behaviour can thrive. In Ghana, the cost of cash is making a tremendous impact on growth as the shadow economy is allowed to thrive."

Recommendations

Specifically, to accelerate Ghana’s progress in building an inclusive digital payments ecosystem, the report recommends:

-Rolling out a biometric National ID as planned and making explicit efforts to enable payments and other financial use cases;
-Improving payment interoperability;
-Digitising government procurement payments to and from citizens or businesses;
-Leveraging electronic fund transfer infrastructure for business-to-business payments; and
-Incentivising digital payments at the point of sale.

“These measures can help bring Ghana to a tipping point on its digital payments journey, as individuals, businesses, and government increasingly realise the power of digital payments to deliver major savings and efficiencies, strengthen businesses, and materially improve lives.”