Fast Facts

Financial Technology (fintech) in Ghana is primarily composed of telecommunications services, banking services, financial services, and telecommunications companies .
Ghana is the fastest growing mobile money market in Africa, a service which allows individuals to send money without having a traditional bank account.
The Government of Ghana has introduced an array of digitization and innovation initiatives under the Digital Ghana Agenda in an effort to facilitate fintech growth, such as the regulatory and innovation Sandbox Pilot to promote growth in this sector.

Market Size

Fintech has transformed the financial industry in sub-Saharan Africa with new technologies changing the competitive landscape of the financial sector. Ghana is the second largest economy in West Africa, with a fintech system that has undergone many phases of diversification. Fintech entered the Ghanian market in 1997, and in 2008 the government adopted a smart payment system which permitted banks, savings and loan companies to conduct cashless transactions. Ghana’s fintech landscape has been coined one of the most active in sub-Saharan regions as it has one of the highest mobile adoption rates.

There are approximately 11 million active mobile payment users in Ghana, and 80% of transactions stem from electronic systems. The Bank of Ghana estimates there are over 70 Fintech companies in the country.

Opportunities

Solid underlying demand

The stable demand for Fintech services is underpinned by growing telecom connection and 3G/4G data penetration rates. As Ghana moves towards industrialisation and away from agriculture-derived sources of GDP growth, the government has demonstrated a desire to digitise and innovate Ghanaian society through the Digital Ghana Agenda. While COVID-19 has presented an array of challenges, the pandemic also revealed significant opportunities in the Fintech sector. COVID-19 raised concerns about making physical visits to the bank and using cash money which could be easily contaminated by virus particles. Digital financial services enable contactless and cashless transactions. Following COVID-19, Ghanaian authorities introduced measures to lower costs and increase the limits on transactions for digital transactions that could accelerate a shift toward digital financial services as stated under the Toward a Cash-Lite Ghana framework. The Cash-Lite Framework Mobile money transactions are now a substantial part of the Ghanian financial system, with over 11 million people using the service.

Sound future prospects

Internet usage in Ghana has steadily increased over the last few years. In 2018, 10 million Ghanians were using the internet, equivalent to approximately 35% of the population, an increase of two million since 2017. In January 2021, the number of internet users increased to 15.70 million, approximately 50% of the country. Africa has recorded the fastest growth of internet penetration worldwide. These current internet uptake trends indicate that the Ghanaian Fintech sector will be underpinned by growing internet connectivity. In 2018, the government of Ghana streamlined mobile money payments through the Payment Systems and Services Bill, which provided a framework for digital payments and permitted non-bank entities to operate in the sector also.

Under the Ghana Cash-Lite Roadmap, launched in May 2020, the Ministry of Finance has laid out a framework to introduced a number of fiscal incentives for fintech companies, including: tax holiday (for fintechs), tax rebates (for consumers), reduce taxes on smartphones, POS, payments cards.

Innovation

Innovation is an innate aspect of financial services. Ghana Fintech has been open and conducive to innovation in the Fintech sector, for example the E-Zwich payment system (a platform which links banks) was integrated with mobile money wallets, while a prototype agent registry was developed for the payment ecosystem and piloted in 2018. A second example is the migration of the payment card industry in 2018 from magnetic stripe technology to Europay Mastercard Visa (EMV) chip and PIN technology.

Awareness

Ghanaians are highly aware of mobile money services, as indicated in the 32.5 million mobile money accounts (of which 14.5 million are considered active). They also frequently engage in financial activities, such as saving, investing, and borrowing and buying insurance. Furthermore, 99% of Ghanaians possess a mobile phone and have access to 3G/4G networks. These three aspects indicate the immense capacity of Fintech to grow in Ghana.

Market Extensions
Ghana is one of the four major hubs in Sub-Saharan Africa alongside Nigeria, South Africa and Kenya. Recent developments show encouraging signs of Fintech growth in Ghana which is becoming a new destination for foreign investment. Australian FinTech corporations may be able to leverage entry into the Ghanaian financial services industry as a gateway to other West African countries.

Challenges

As mobile money becomes more popular, incidents of mobile money fraud have also increased. The Ghanian police department states there were over 300 cases of mobile money fraud in 2019. As a result, MTN (Ghana’s biggest mobile money operator) introduced a new policy which required ID before a customer can withdraw cash. However, only 52% of Ghanaians have a formal ID. This policy essentially restricts and excludes individuals from using mobile money and decreases the demand for fintech in Ghana. Corruption has generally cast insecurity on the financial sector in Ghana as it deters investment and savings. Furthermore, currency fluctuations coupled with high interest rates and high cost of inputs in Ghana add to the fragility of the overall system and can make initial investments difficult.

Since the fintech market is still young in Ghana, some regulatory framework is lacking. For example, cryptocurrencies are considered illegal and no regulations guiding their proper operation have been created. The Bank of Ghana currently considers cryptocurrency transactions as illegitimate, and has not created any regulation surrounding the technology and has thus advised Ghanaians to stay away from it. Ghana’s Securities and Exchange Commission (SEC) has warned residents in West Africa to avoid any cryptocurrency transactions as they believe there are many risks associated with the investment. Trepidation from the Bank of Ghana and SEC in regulating fintech and innovative investment opportunities is one of the biggest challenges to Ghanaian fintech. Australian companies will also need to foster trust with Ghanaian consumers before they can expect solid uptake of technology.

Competitive environment

The fintech sector can be understood through three sub-sectors: Banking and Finance (including Non-Bank Financial Services and Forex Bureaux); Insurance; and financial/capital markets.

Smartphones for mobile banking, investing, borrowing services, and cryptocurrency are examples of fintech, as well as mobile money which can be used with simply a phone number and no formal bank account.

Payment solution companies such as mobile money services operated by telcos, smartphone applications such as zeepay and expresspay, crowdfunding apps like GoFundMe and Kickstarter, Insuretech, distributed ledger technologies such as blockchain are key components of the country’s fintech ecosystem. Cryptocurrencies such as bitcoin are considered illegal by the Central Bank yet many individuals are known to invest.

Biggest banks in Ghana: Ghana Commercial Bank Limited, Ecobank Ghana, Zenith Bank Ghana, Barclays Bank of Ghana, Agricultural Development Bank and UniBank Ghana.

Well-known telephone companies have also begun to offer phone banking services; such as; MTN Mobile Money, Tigo Cash, Airtel Money, and Vodafone Cash.

Mobile money is particularly important for remittances as it offers a fast, affordable and secure transfer system.

Laws and Regulations

The Bank of Ghana is the key regulator of the fintech industry and recently established the fintech and Innovation Office
The Bank of Ghana is shifting its focus to blockchain technologies in an attempt to regulate the sector
There are a plethora of laws and acts in place which aim to protect and address the risks associated with fintech

Key regulators

The Payment Systems and Services Act, 2019 (Act 987) - This main regulatory framework applies to banks, specialised deposit-taking institutions, payment services providers, dedicated electronic money issuers and their affiliate and/or agents.
- The Bank of Ghana issued a notice on the updates for licensing requirements for payment service providers. The licensing requirements can be found here.
Bank of Ghana - key regulator of the fintech industry in Ghana
Fintech and Innovation Office - with the responsibility for mobile money operators, payment service providers, closed loop payment products, payment support solution and other forms of payments not done by banks. The office will also develop policies to promote fintech and innovation

Regulatory issues

Fintech is ubiquitous in nature and therefore requires a comprehensive legal framework to forestall the challenges associated with it. The major drawback that plagues fintech is cyber and fraudulent activities.

Strengths:

Only one central regulator that deals with the rules and regulations to enter the fintech market in Ghana.
There is a financially stable middle class population in Ghana that shows at least 73% of adults live above the poverty line and 75% say their income allows them to save up for more expensive goods or investment opportunities.
There is a demand for more seamless payment methods from banking customers in Ghana so there is a strong appetite to grow the market from the population.
The potential to digitize transport fares which will cut down or prevent delays, avoid contentions with passengers, improve fare regulations, regulate tax payments, and help track vehicles along their designated routes.

Weaknesses:

Persistently high interest rates in Ghana are a major barrier to affordable access, scaring away potential customers and investment both domestically and abroad.

For remote areas there is poor infrastructure, and a high cost of inputs with insufficient reliable suppliers. This limits more regional growth of the sector.

Increasing fraudulent activities in the market and cyber crime.

Laws/Acts relevant to Ghana fintech:

The Payment Systems and Services Act, 2019 (Act 987) regulates fintech companies and outlines laws on licensing, requirements, compliance, consumer protection and the responsibilities of electronic money issuers.
Cybersecurity Act - implemented in 2020 to combat cyberattacks, it aims to regulate owners of critical information in respect of cybersecurity activities, service providers and practitioners.
Anti-Money Laundering Law - this act outlines provisions on how to identify unlawful activity and to combat monye laundering, terrorism-financing, weapon-financing and tax evasion. Fintech businesses are now requires to be anti-money laundering compliant
Electronic Transactions Act - this act sets out provisions to safeguard electronic transactions.

Incentives

Under the Toward a Cash-Lite Ghana framework, commenced in May 2020, the Ghanaian government outlined a variety of incentives to companies operating in the fintech space:

Incentivising digital payments - government to provide short-term income tax incentives for businesses that adopt digital means of payment

Develop policy that lowers cost, increases access and digital payments
Tax holiday (for fintechs), tax rebates (for consumers), Ghana first policy (source local/external form for government payment and digitisation needs), reduce taxes on smartphones, POSs, payments cards
Enhance current regulatory environment - institute a framework that encourages innovation by fintechs such as standards, open systems, application programing interfaces (APIs)

Using trade agreements

There are no trade agreements in place between Australia and Ghana.

Key distribution channels

There are no specific prohibitions/restrictions on fintech businesses however, fintech companies must operate in compliance with the laws of Ghana. Cryptocurrency and blockchain technologies are not regarded as legitimate in Ghana.

Doing business

The way to do business is different in each country. Before you export, it is good to get familiar with the business environment and main economic features of the market you are interested in.

Business Environment in Ghana

The Bank of Ghana is responsible for the regulation of fintech in the country – including all supervisory and regulatory matters related to payment, clearing and settlement systems. You must go through them in order to work within the fintech market space.

Cultural considerations
In each country, the way people do business varies. You may need to adjust your expectations and be sensitive to how business is done.

Resources for doing business in Ghana:

Ease of doing business rank

The current ranking for Ghana is 118 out of 190.

Setting up

In order to gain access to Ghana’s fintech market you will need to obtain a licence that suits your business model and complies with the Payment and Services Act 2019(Act 987). There are 5 different types of licences depending on your needs.

Dedicated Electronic Money Issuer:

The recruitment and management of agents, creation and management of wallet, P2P On Net/Off Net, cash-in and cash-out, wallet based domestic money transfers (including transfers from bank accounts), investment, savings, credit, insurance and pension products.

2. Payment Service Provider Scheme

Permissible activities for this category are domestic card brand associations (e.g. Gh-Link) and switching and routing of payment transactions and instructions.

3. Payment Service Provider – Enhanced

All permissible activities for Payment Service Providers (PSP) – medium licence and in addition, marketplace for financial services offered by duly regulated financial service providers.

4. Payment Service Provider – Medium

Allowing to connect to an Enhanced PSP to offer, all permissible activities for PSP – standard licence, payment aggregation (connected to Enhanced PSP), biller or merchant aggregation, POS deployment, printing of non-cash payment instruments, mobile payment apps (with liability shift)

5. Payment Service Provider – Standard

Allowed to connect to an Enhanced PSP to offer mobile payment applications (liability shift on PSP enhance).

After you have applied for a licence it will be granted after taking into consideration the key aspects of the governance arrangements, appropriate fees, technology, security and controls, adherence with universal principles of consumer protection and appropriate complaint procedures.
For foreign companies, applicants must ensure that they have at least 30% equity participation of a Ghanaian in the fintech company before being able to obtain any licence.

Promoting your business

Ghana’s fintech landscape is evolving. Fintech businesses are involved in insurance, agriculture, banking, pensions and investment services. (www.chambers.com) As a result there are plenty of potential avenues for fintech companies to be involved in Ghana’s growing fintech marketplace.

Businesses should contact the Bank of Ghana’s newly formed fintech and innovation office. They are responsible for licensing and oversight of dedicated electronic money issuers. The office will also develop policies to promote fintech, innovation and interface capabilities in Ghana.

There contact details are below:

Email: fintech@bog.gov.gh

Website: www.bog.gov.gh

Visas

Australian travellers should consult Smartraveller, the Australian Government’s free online travel advisory service.

You are also advised to enquire directly with the Ghana High Commission Canberra’s Consular Services.

Intellectual property

Various forms of intellectual property developed by fintechs are protected under the Copyright Act, 2005 (Act 690), the Patents Act, 2003 (Act 657), the Trademarks Act, 2004 (Act 664), the Industrial Designs Act, 2003 (Act 660) and / or the Protection Against Unfair Competition Act, 2000 (Act 589) and their respective subsidiary legislation.

There is also a registration regime for works that are eligible for copyright protection in Ghana that allows for easy tracking and verification of copyrights. For more info see this Q&A on Ghannain fintech Protections by legal500.com.

You can also consult with an IP lawyer in Ghana. Austrade can refer you to a list of IP lawyers in Ghana. Contact Austrade on 13 28 78 or email info@austrade.gov.au.

Contacts