16 April 2018

Ghana: Mobile Banking Revenues to Hit of U.S.$1.5 Billion

CELLPHONES and rising connectivity in Ghana and other parts of Africa will give rise to a new market in mobile financial services, creating explosive opportunities for business on the continent, according to research.

The Boston Consulting Group (BCG) estimates that in the next three years, 250 million Africans including Ghanaians without access to traditional banking services will have mobile phones and a monthly income of at least $500. That could translate to projected revenues of $1.5bn from mobile financial services, it says in its latest report.

It is key for a continent where the banking system is hugely underdeveloped. A mere 25 percent of Africans have a regular bank account. But strides have already been made in mobile banking.

Mobile Financial Service is a generic name referred to all kinds of mobile money service transactions in Ghana. However, various telecommunication network Providers in Ghana have different names for it. For example, MTN calls it MTN Mobile Money, while Airtel calls it Airtel money, and for Tigo users, it is known as Tigo Cash.

In Kenya, for example, the mobile money system has nearly 18 million users, thanks to the M-Pesa service. In Ethiopia, cellphones are now being used to push an electronic payment service called M-Birr.

Sub-Saharan Africa leads the world in mobile money accounts, according to the World Bank. 'While just two percent of adults worldwide have a mobile money account, 12 percent in sub-Saharan Africa have one,' the bank said in a separate study based on 2015 data.

That number is projected to increase now that more than 50 percent of all Africans over the age of 15 own a cellphone and since these phones are a low-cost way to reach a huge market.

"For most of these consumers,' says the BCG report, 'mobile banking will be their first experience with financial services."

Most Africans use cellphones to transfer money, but also to prepay utilities and purchase small items, as well as to make debit card transactions, BCG says.

The survey of 11 countries in sub-Saharan Africa found that four in 10 Africans access the internet using a cellphone, while three-quarters use a computer to get on the web.

Since 2013, the number of Africans with access to the internet has grown 8 percent. In Côte d'Ivoire, access to the internet has gone from 200,000 in 2008, to 8 million in 2016, thanks to 3G.

This connectivity, coupled with rising consumer classes and Africans' increasingly optimistic outlook, will translate to more than 1.1-billion consumers by 2020, the group says -- 'more than the populations of Europe and North America combined.'

"The concept of a middle class is taken from the western society model and has led to confusions when we talk of Africa,' Lisa Ivers, director of the BCG bureau in Casablanca has said.

"The African socioeconomic reality is vastly different across African countries and from more established markets. But that absolutely doesn't lessen our confidence over the potential of the African domestic consumption," she added.

The group projects that by 2020, Africa will be home to twice as many affluent consumers as the UK -- and they 'are very optimistic and eager to spend.'

Of the more than 11,000 people surveyed between February and March 2015, 88 percent said they were optimistic about the future.

In Egypt, Kenya, and Nigeria, more than 90 percent said they were optimistic.

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