fii ghana 2015: the state of financial inclusion and mobile financial services

FII Ghana 2015: The state of financial inclusion and mobile money in Ghana

Peter ZetterliDecember 2015

About CGAPThink tank housed in the World Bank dedicated to expanding financial inclusion.

Supported by 30+ members, incl. bilateral and multilateral donors, private foundations.

Mission to understand and disseminate significant innovations in the inclusion field to practitioners, policy makers, regulators and donors active in the space.

Active in Ghana since 2011, focused on the mobile financial services market.

About FinScopeSurvey developed by FinMark Trust to measure levels of access and uptake of financial products and services (both formal and informal).

Ghana FinScope 2010 results form the basis for analysis of trend changes in this presentation.

While FinMark Trust has been helpful to this exercise, FinMark Trust is not in any way responsible for the analysis or any interpretations thereof.

Financial inclusion in Ghana3

The financial landscape in Ghana has developed since 2010

Access Strand in FII 2015 vs FinScope 2010

Note: Shows access to services, not accounts. Minor differences exist between surveys.

34%

36%

7%

22%

15%

17%

44%

25%

2010

2015

Bank Non-bank formal Informal only Excluded

Access to formal financial services has risen by nearly half Comparing FinScope 2010 and FII 2015

41%

58%

15%

17%

44%

25%

2010

2015

Formally included Informal only Excluded

41% expansion of access

The main driver is rapid growth in nonbank formal servicesAccess to these services tripled in five years

34%

36%

7%

22%

15%

17%

44%

25%

2010

2015


3x

34%

36% 7% 8%

7%

7%

15%

17%

44%

25%

2010

2015

Bank MM only NBFI & MM NBFI only Informal only Excluded

Half of this is directly attributable to mobile moneyThe other half is thanks to both mobile money and other nonbank formal

Included only by MM

Ghanaians have roughly the same level of access to banking, mobile money and other formal financial services

Note: Slide shows access to services, not accounts. FinScope definitions are used.

Looking strictly at accounts, banking still contributes moreBut mobile money accounts have substantially outgrown NBFI accounts

of Ghanaian adults have registered accounts with a formal financial institution

34% have bank accounts

have nonbank financial institution accounts

have mobile money accounts

Note: FII definitions are used. NBFIs exclude credit-only institutions.

48%

20% 8%

Sour

ce:

Inte

rMed

ia F

II T

rack

er S

urve

ys 2

014-

2015

.

Ghanaians are highly banked compared to peers

14%16%

21%

28%

34%

Uganda Rwanda Tanzania Kenya Ghana

Share of adults who have a registered bank account (%)

Sour

ce:

Inte

rMed

ia F

II T

rack

er S

urve

ys 2

014-

2015

.

…while mobile money in Ghana is still developing

Share of adults who have a registered mobile money account (%)

63%

38%33%

23%20%

Kenya Tanzania Uganda Rwanda Ghana

But banking has expanded only very marginally since 2010

34%

36%

7%

22%

15%

17%

44%

25%

2010

2015


The share with only informal access has also changed little

34%

36%

7%

22%

15%

17%

44%

25%

2010

2015


Financial exclusion has been reduced by almost halfBut one in four Ghanaians are still excluded

34%

36%

7%

22%

15%

17%

44%

25%

2010

2015


43% drop in exclusion

Financial inclusion has expanded fastest in more excluded areas

Access to formal financial services by region, 2010 vs 2015

0% 10% 20% 30% 40% 50% 60% 70%

Upper West

Northern

Volta

Upper East

Brong Ahafo

Central

Western

Eastern

Ashanti

Greater Accra

2010 2015

Use of most commercial financial products has grown since 2010The largest impact is on remittances

Share of adults using respective financial products (%)

Note: FinScope 2010 definitions are revised to match FII 2015 data. Insurance excludes NHIS

26%

45%

7%11%

24%

0%

10%

20%

30%

40%

50%Transactional

Savings

CreditInsurance

Remittance

Financial Inclusion Insights (2015)

21%

37%

9%5%

5%0%

10%

20%

30%

40%

50%Transactional

Savings

CreditInsurance

Remittance

FinScope (2010)

Use of formal remittance

products rose 5x

Use of insurance products doubled

Use of credit products fell

slightly

Transactional and savings products grew by 20-25%

The impact of MM in formalizing remittances is apparentA less apparent, but also clear, impact on savings

23%

40%

6%11%

11%0%

10%

20%

30%

40%

50%Transactional

Savings

CreditInsurance

Remittance

2015 without mobile money

26%

45%

7%11%

24%0%

10%

20%

30%

40%

50%Transactional

Savings

CreditInsurance

Remittance

2015 with mobile money 2 / 3 of the increase is

thanks to MM

2 / 3 of the increase on savings is due to MM

Share of adults who use various financial products (%)

0%

10%

20%

30%

40%

50%Transactional

Savings

CreditInsurance

Remittance

Total Banking ONLY

0%

10%

20%

30%

40%

50%Transactional

Savings

CreditInsurance

Remittance

Total Mobile Money ONLY

But the role of MM in the overall provision of formal financial products and services is modest compared to banking

Summary of takeaways on inclusion in Ghana

Financial inclusion has

expanded substantially in last five years

This is driven by nonbank

formal, notably mobile money

Banking is comparatively high but not

growing much

Lagging regions are catching up

faster

Vulnerable groups22

12%

18%

20%

25%

31%

30%

31%

12%

15%

15%

18%

20%

20%

20%

3%

5%

7%

6%

5%

7%

7%

Poor

Rural

Female

Total population

Male

Non-poor

Urban

Active bank account holders

Active MM account holders

Active NBFI account holders

Female, rural and poor Ghanaians are less likely to be using any type of financial accounts with formal institutions

Share of sub groups with active financial accounts (%)

Note: Bars are cumulative and may reflect multiple responses

The poor are as likely to be using MM accounts as they are bank accounts

Financial inclusion has expanded particularly fast in rural areasRural access to formal financial services has doubled since 2010

26%

51%

18%

21%

55%

29%

2010

2015


2x

Rural

Rural banking access has grown better than national averageExpanded by 30% since 2010

21%

27%

5%

24%

18%

21%

55%

29%

2010

2015


Rural

…but again the real change is driven by nonbank formalAccess grew fivefold since 2010

21%

27%

5%

24%

18%

21%

55%

29%

2010

2015


Rural

5x

21%

27% 8% 8%

5%

8%

18%

21%

55%

29%

2010

2015


Again thanks to a combination of mobile money and other nonbank formal financial institutions

Included by MM

Rural

Strikingly, fewer urban Ghanaians report having bank accountsHowever banking still represents 2/3 of formal inclusion

52%

43%

9%

22%

11%

13%

28%

22%

2010

2015


17% drop

Urban

But rapid growth in nonbank formal is a counterweight

52%

43%

9%

22%

11%

13%

28%

22%

2010

2015


2.5x

Urban

…as a result, urban inclusion still managed to expand

61%

65%

11%

13%

28%

22%

2010

2015

All formal Informal only Excluded

Urban

Access to formal financial services has grown slightly faster for women than for men

37%

57%

18%

20%

45%

24%

2010

2015

Male

Female

45%

62%

12%

12%

43%

26%

2010

2015


Women have less access to banks—and the gap is growing—but nonbank formal has expanded their formal inclusion substantially

29%

31%

8%

26%

18%

20%

45%

24%

2010

2015

Male

Female

40%

43%

5%

19%

12%

12%

43%

26%

2010

2015

Banked Nonbank formal Informal only Excluded

40%

43% 7% 7%

5%

5%

12%

12%

43%

26%

2010

2015


Women are more likely to rely on all kinds of nonbank formal for access than men are

Male

Female

29%

31% 8% 9%

8%

9%

18%

20%

45%

24%

2010

2015

Access to banks is the big distinguisher between the poor and non-poor in formal inclusion

41%

21%

24%

20%

14%

23%

21%

36%

Non-poor

Poor

Banked NBFI only Informal only Excluded

1.7x0.5x

The poor / non-poor inclusion gap is smaller for mobile money Inequity in active registered use of bank accounts is more than twice that for MM

30%

20%

12% 12%

Bank MM

Nonpoor Poor

2.3x

…as is the urban / rural gap

31%

19%18%

15%

Bank MM

Urban Rural

2.7x

…and the gender gap

31%

20%20%

15%

Bank MM

Men Women

1.7x

But women are twice as likely to not have a phone and more likely to need help to use it—not to mention use MM

4%

19%

12%

7%

27%25%

Do not have a phone, borrow fromother people (% of total population)

Need help using mobile phone (% ofmobile phone users)

Need help making MM transactions (%of MM users)

Males Females

93%87%

91%

71%

45%

19%

35%

15%

Non-poor women Poor women Non-poor women Poor women

Urban Rural

Own a mobile phone Own a DFS account

And poor women are less likely even than other women to have phones and mobile accounts, especially in rural areas

Share of women who own mobile phones and DFS accounts (%)

The mobile money space40

The market has been picking up speed for some time, growing at 2.5x per annum for the last couple of years

Source: CGAP estimates. Note: Shows accounts, not users. Includes non-MM DFS accounts.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015

Mill

ions

Active DFS accounts, market wide (90 days)

A few statistics on the mobile money market right now

Source: Bank of Ghana, Nov 2015. Note: Shows accounts, not users. Excludes non-MM DFS accounts.

44,000active MM agents

$100mMM wallet balances

10m registered MM accounts

$900mtransacted each month

4.4m active MM accounts

24m transactions each month

70%

17%

10%3%

MTN

Tigo

Airtel

Vodafone

MTN is the clear market leader—but also faces considerable competition

Market shares of 90 day active mobile money accounts (%)

Source: Bank of Ghana, Nov 2015. Note: Shows accounts, not users.

Nearly half of active MM account holders also use a bank account

Share of active users of bank and/or MM accounts who use either or both types (%)

51% 20% 29%

Bank only Bank and MM MM only

This is in line with evidence from peers that there is no contradiction between banking and mobile money services

Share of active users of bank or MM accounts who use either or both types of accounts (%)

5%

30%

1%

21%

51%

37%

20%

45%

26%

20%

59%

58%

53%

54%

29%

Uganda

Tanzania

Kenya

Rwanda

Ghana

Bank only Bank & MM MM only

MM customers find service points (agents) more accessible than customers of other financial institutions

0%

25%

50%

75%

100%

MM agent ATM Bank branch MFI branch Credit Unionbanch

Cooperativebranch

<1km from home 1-5km from home >5km from home

Proximity to service points (users of the respective financial institutions; %)

11%

30%

9%

10%

This greater proximity is particularly evident in rural areas

Distance from the bank for*: Distance from agent for**:Bank active users

Bank rural users

Less than 5 km More than 5 km

MM active users

MM rural users

This may be one explanation why MM is already more common than banking in some more rural and remote regions

Ashanti12%

Brong-Ahafo15%

Central16%

Eastern16%

Greater Accra13%

Northern13%

Upper East13%

Upper West18%

Volta21%

Western16%

22%

19%

16%

13%

10%

MM active usage Bank account active usage

Ashanti21%

Brong-Ahafo18%

Central20%

Eastern23%

Greater Accra27%

Northern13%

Upper East23%

Upper West13%

Volta19%

Western14%

30%

25%

20%

15%

10%

Mobile money accounts are also half as likely to be inactive

Share of adults with registered vs. active bank and MM accounts (%)

Note: Active is defined as having been used within the last 90 days. All figures are self reported.

34%

20%

25%

17%

Banks Mobile money

Registered Active

27% dormant

13% dormant

Mobile money is now arguably the most accessible form of financial service

99% of Ghanaians are

aware of at least 1 provider and 29% have

used MM

25% are actively using MM and 17%

are active account users

There are over 40,000 active MM agents in Ghana today

71% of MM users know of

a MM agent <1km from their home

This figure is for banks 52% and MFIs 32% of users

Broad takeaways

While Ghana is making great progress, a quarter of Ghanaians remain excluded

Access Strand in FII 2015

Note: Figures show access to services, not accounts

36% 22% 17% 25%2015


…and almost a fifth have to rely on informal financial services to their financial access

Access Strand in FII 2015

Note: Figures show access to services, not accounts

36% 22% 17% 25%2015


Banking is growing, but too slowly to be the main engine for expanding financial inclusion

Share of adults with access to various financial services, 2010 vs. 2014

34%

0%

20%

36%

29% 29%

Bank MM Other formal

2010 2014

MM has great potential to keep expanding access, as evidenced by the leading markets in East Africa

Share of all adults in Tanzania

Source: FinScope Tanzania

0% 1%

50%54% 55%

27%

2006 2009 2013

MM users

Financiallyexcluded

Ghana has all the base conditions for MM to be successfulIn fact conditions are better here than in the leading East African markets

0%

25%

50%

75%

100%

% with required ID % with basic numeracy % own a mobile phone % ever send/receive SMS


Phone ownership is very high, even in disadvantaged groups

Share of sub groups who own a mobile phone (%)

0%

20%

40%

60%

80%

100%

National Male Female Urban Rural Non-poor Poor Rural, poorfemale

71%

19%

22%

26%

28%

28%

30%

31%

33%

36%

78%

99%

100%

Downloaded a mobile phone application

Made a financial transaction

Used on-demand provider services

Downloaded music, video or games

Sent/received MMS

Used touchscreen

Used social networking

Used the Internet

Taken a photograph

Sent/received SMS

Received calls

Made calls

Ghanaians are fairly sophisticated mobile phone users

% of adults with access to mobile phones

Advanced activities

…and also quite independent in their phone useMost can transact without assistance, including 4 out of 5 MM users

% of those who ever performed a specific activity who can do so without help

93% 92% 91% 89% 87%82% 82%

Internet Touchscreen MMS messages Downloadingmusic etc

Mobileapplications

Take photos Financialtransaction

Ghana’s regulatory environment for MM is steadily improvingTwo landmark regulations promulgated in 2015

E-Money Issuer

Guidelines

Agent Guidelines

And the mobile money space is now quite competitive

Sour

ce:

Inte

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014-

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.

So there’s no reason not to expect Ghana to catch up with the leading mobile money markets in East Africa

Share of adults who have a registered mobile money account (%)

63%

38%33%

23%20%


7mGhanaians

This development is complementary to banking and should not be seen as a threat to banks, as East Africa also shows

Bank vs MM accounts in Kenya, 2007-2013

Data source: Central Bank of Kenya

On the contrary, the expansion of formal accounts enables a range of other services, many of which are powered by banks

The MFS ecosystem in TanzaniaAgriculture Water

Savings

Insurance

Merchant solutions

Credit

Energy

Mobile Money

FarajaInsurance farijika

Taxes and fees

A few things that we think should happen now

• Regulators need to stay abreast of the rapid developments in the space in order both to enable new services and to regulate them appropriately and protect customers’ interests.

• From a policy perspective, government should formulate a vision for mobile financial services and the digital ecosystem—not least how government itself should leverage MM.

• Banks should explore the many new opportunities that the mobile channel opens up, to deliver a broader array of mobile financial services in partnership with MM providers.

• MM providers must continue to improve reliability, build trust and deliver real value to customers.

Advancing financial inclusion to improve the lives of the poor

www.cgap.org

http://www.themastercardfoundation.com/

http://www.themastercardfoundation.com/

fii ghana 2015: the state of financial inclusion and mobile financial services

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