Archive for: Ghana

“Cash is easy.” “Cash is what I know most.” “There are no charges when I use cash.”

Ghana Market Seller (Photo Taken by Adam Jones)

I was sitting in a little room in the outskirts of Accra listening to a group of tomato sellers talk about the financial tools they use to manage their finances. As a part of CGAP’s work in Ghana, we have commissioned Bankable Frontiers Associates (working with Easy Errands, a Ghanaian market research firm) to conduct a market research study on the financial needs of low-income customers in Ghana. One of the first steps was to conduct focus groups throughout the country and listen to diverse groups of Ghanaians, including farmers, taxi drivers, traders and students, talk about their strategies for moving and storing money. They discussed bank transfers and drivers and the use of family and friends but more than anything, they talked about cash.

The trite expression ‘Cash is King’ is over-used in our line of work, but as I sat in that little room listening to these people whom mobile money services have spent millions of dollars trying to woo, I realized yet again that the biggest competition we face in scaling branchless banking is not a rival MNO or bank or even the expensive money transfer operators – it’s cash. (Read some recent posts on our blog about this topic here and here.)

Cash is far and away the preferred method for storing and sending money in Ghana, no matter how inconvenient. One tomato seller, Charity, wraps her cash in no less than six black plastic bags and hides it in the back of her refrigerator, underneath her tomatoes and meats, so that the rest of her family does not suspect it is there.  A timber seller, Emmanuel, told us he keeps his cash under the carpet in his living room. When asked whether the cash does not form a noticeable bulk, he replied with a big grin, ‘That’s why I spread it all around so that people walk all over my cash but have no idea it is beneath their feet!’

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This is the second in a five-part series on product innovation in branchless banking. In the first we described how developing products beyond payments is one part of driving scale for providers, and ultimately boosting financial inclusion.

Henry Ford famously said, “If I’d asked people what they wanted, they would have said faster horses.”

There’s two ways to understand what he meant. One is customers don’t know what they want, so why bother asking. But for every Henry Ford or Steve Jobs (Who said “It’s not the customer’s job to know what they want.”) there are 1000 businesspeople who thought they knew the next brilliant product and are now staring at a cash flow statement soaked in red. Genius is in short supply.

The rest of us mere mortals must subscribe to a second interpretation: customers often can’t or won’t tell you what they want, so you must work to dig down to what they really need. To understand this requires knowledge about not only their current use of substitute products, but also their broader life context: their household situation, their aspirations, and their worries.

A prime example of this need for deeper customer understanding is the vastly different levels of success which very similar mobile money products have encountered across markets. M-PESA Kenya’s success has spurred providers across the globe to launch services with similar functionality: a liquid wallet with an emphasis on P2P transfers (“send money home”) and bill pay functionality. As we highlighted in the first post in this series, the “send money home” proposition has not yielded as much success outside Kenya where just 1 in 15 services launched since 2007 have accumulated more than 250,000 active users. This can be explained by differences between markets that have profound effects on how consumers perceive the value of otherwise similar services.

A truly valuable service would meet two criteria: they must fill both a deeply felt and a poorly met need (see figure): Read the rest of this page »

Over the past several months, we have taken a close look at the branchless banking industry in a few key countries. We have presented our learning from Brazil, Mexico, India and Pakistan. Today we continue with our analysis of Ghana and share this summary note on the branchless banking industry.

With 6 live branchless banking deployments involving 12 banks, 3 Mobile Network Operators, 2 start-ups and a government entity, the race is on in Ghana to reach the unbanked with branchless banking services. Ghana has 15 million adults and a majority of the population living on less than $2 a day, making it significantly smaller and poorer than the other countries featured in this series. It is a unique market with a regulatory focus on interoperability and interesting dynamics in the bank-MNO partnerships. As the market develops, it should yield useful lessons on the role of government, interoperability and the nature of partnerships.

In 2008, the Bank of Ghana issued Branchless Banking Guidelines that allowed for a bank-based model of branchless banking using nonbank retail agents. This is common yet the Bank of Ghana added a stipulation that makes the market different from any other we know: it also prohibited exclusive partnerships and only permitted a many-to-many model. Its reasoning was that “this model offers maximum connectivity and hence maximum outreach and is closer to the desired situation where all banks and all telcos should be able to entertain each other’s customers.”  As a result, each of the MNOs with branchless banking services has signed up at least 3 partner banks (and in one case, 9).

So, who are the main players? Of the 6 branchless banking deployments, 3 (Airtel Money, MTN Mobile Money and Tigo Cash) are run by MNOs in partnership with banks. Of these, MTN Mobile Money has been around the longest and has the highest number of registered customers. Two others (AfricXpress and eTranzact) are start-ups and one (eZwich) is actually run by a government entity, the Ghana Interbank Payment and Settlement System. Together, the deployments claim to have more than 3 million registered customers but the number of active customers is much less. This is partly due to issues within the MNO-bank partnerships as well as a combination of operational challenges around building a viable agent network, effective marketing and robust technology.

Moving forward, there are at least 4 interesting dynamics within Ghana that should yield lessons applicable to the wider branchless banking world:

• Interoperability and the Role of Government – The Bank of Ghana is actively trying to ensure that branchless banking services are interoperable from the inception of the industry. In addition, it is pushing its own interoperable card and POS solution in the market. Many governments are interested in interoperability and the Ghana market will provide useful lessons on the pros and cons of direct government support for this.
• Bank-MNO Partnerships – Around the world, banks and MNOs are forming often uneasy alliances, acknowledging that each needs the other but struggling to bring two very different cultures together. In Ghana, these dynamics are exacerbated as each MNO is working with multiple banks. Not only is there disagreement between the MNO and the banks on roles and responsibility (and corresponding remuneration) but the banks are asked to invest in a service that will also directly benefit their competitors.
• Customer Adoption and Product Development – The current deployments have struggled to gain traction with customers when pushing domestic remittances. The market to ‘send money home’ seems to be limited and there is a big opportunity for creative product development in areas such as micro insurance (exciting pilots are underway) and even savings (Susu collectors are widespread in Ghana).
• Agent Networks – The MNOs in Ghana are taking very different approaches to building networks of agents. MTN has built a completely independent network of cash-in/out agents as airtime distributors were initially reluctant to get involved in mobile money. However, other MNOs are attempting to completely leverage their existing airtime staff and distributors. It will be interesting to see how these two different approaches work in the same market.

There will be much to learn from Ghana as the market develops. For more detailed information on branchless banking in Ghana, read our country note here.

- Claudia McKay

In previous blogs Mark Pickens has lamented the lack of innovation by branchless banking providers in products that go beyond payments. But there are some green-shoots of innovation. In this blog we take a look at some examples of early experiments that we have seen involving in micro-insurance.

It could be argued that micro-insurance is the ideal financial product to be offered via branchless banking. Insurance requires a large base of customers: the larger the base, the more diversified the risk for the insurer, and the cheaper the insurer is able to offer the product. And branchless banking, we have long argued, is a business built on high volumes and low margins.

It seems that several others share this view. Here’s a quick summary of three of the most exciting examples that we have come across around the world that pair micro-insurance with branchless banking channels:

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From the twelfth floor of a tower block with beautiful views over Accra, Bruno Akpaka is overseeing the roll out of MTN Mobile Money in Ghana. There is a buzz about the office, and there appear to be far more people than the team of six that Bruno claims make up his team. When I ask him about this, Bruno explains that more than two-thirds of the staff on the floor are employed by the partner banks that run the back office functions. Spending some time with Bruno unveiled that this is not the only thing that is different about Mobile Money. There are three main differences to other models around the world which are worth exploring.

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