Ghana should be a ripe market for mobile money. It is one of the world’s fastest growing economies and a handful of providers have been aggressively competing and investing in mobile money for several years now. Yet, as CGAP has written about before, the market has been slow to take off.

Ghana Market Seller The Bank of Ghana (BoG) was early to recognize the potential for branchless banking and issued The Bank of Ghana (BoG) was early to recognize the potential for branchless banking and issued guidelines in 2008 to support its development. The guidelines called for branchless banking services to be led by banks and added a distinctive feature we haven’t seen elsewhere: there must be at least 3 banks involved in every service (‘many to many’) and no exclusive partnerships are allowed. The BoG’s primary goal was to create a system that was open and interoperable so as to provide greater points of access for consumers while ensuring the system was driven by banks (which the BoG perceived as less risky).This decision was informed by Ghana’s experience (similar to many countries) with proprietary ATM networks which were not interoperable, resulting in customer inconvenience and perhaps limiting financial inclusion.

So, how have the guidelines influenced the development of the market? In the four years since the guidelines were issued, three significant mobile money services emerged – Airtel Money, MTN Mobile Money and Tigo Cash – and each has partnered with between 3 and 10 banks. However, the guidelines have unintentionally distorted incentives for providers and do not match conditions on the ground. Banks by and large have declined to play almost any of the roles that the regulations envisaged. They hold the float in a pooled account, are legally responsible for agents and customer KYC and their branches provide passive support to agents in liquidity management. However, there is little incentive for banks to make any significant investments due to free rider concerns. In some ways, the guidelines had the opposite effect as intended – the more banks there are in each partnership, the lower the motivation to invest is and, ultimately, service to customers suffers.

Instead, MNOs have by and large been leading the mobile money services. They are developing the technology platform and front-end product, building the agent networks and investing in marketing. They face several major challenges. First, they are shouldering the vast majority of investment yet legally the service is bank-led and banks own the customer and the agents. In the words of one senior manager, ‘We’re building the industry but they’ll own it.” This is a risky position to be in. Second, they are wasting an incredible amount of time and energy trying to manage and cajole multiple reluctant bank partners. This impacts everything from cajoling banks to allow branches to be used for liquidity management to making product development decisions. One MNO told us that only one of their bank partners was willing to offer interest on a mobile savings account. How should they persuade the other bank partners to also offer interest and, if they are unsuccessful, do they need to drop the idea altogether? Finally, the MNOs have no direct reporting relationship to the Bank of Ghana and need to approach the Bank through indirect channels (partner banks) for every decision—which not only slows things down for the MNOs but leaves the Bank out of touch with the actors that are really driving the market.