Out-Law News 2 min. read
21 Sep 2016, 3:29 pm
Vodafone Ghana told the Ghana News Agency the payments, to be made in two tranches, mean the company will have paid a total of around GHS465,000 ($116,000) to more than 280,000 of its customers in across the country by the end of this month.
The interest payout is the result of guidelines issued to mobile money providers by the Bank of Ghana (22-page / 110 KB PDF). The guidelines include a provision that “e-money issuers shall pass-through not less than 80% of the interest accrued on the pooled e-money float, net of any fees or charges related to the administration of the pooled float accounts, to e-money holders”.
Head of Vodafone Cash Martison Obeng-Agyei, one of the first mobile money providers in Ghana to announce its interest payout details, said: “This is a landmark move by the central bank for all mobile money operators in the country. It is very significant because customers can now have some dividend based on their level of transactions on the platform.”
“We are confident that going forward, we will become very significant in this space in the country,” Obeng-Agyei said. “Vodafone Cash was launched nine months ago and thrives on the M-Pesa platform, which has a global reputation for delivering the best and convenient user experience and reliability.”
Telecoms law expert Diane Mullenex of Pinsent Masons, the law firm behind Out-Law.com, said: “In a country where 70% of the population do not have bank accounts, mobile banking is an important way of increasing financial inclusion.”
“Moves to pay interest to customers by mobile payment operators are welcomed in Ghana,” Mullenex said: “These make mobile banking more attractive. The suggested rates of between 1.5% and 7% are modelled on the rates which banks report paying on current accounts. These compare somewhat unfavourably with the Bank of Ghana’s current benchmark policy rate of 26%.”
“Nevertheless, GBP 135m ($175m) is now held by mobile banking providers in trust accounts for their customers,” Mullenex said. “The payment of interest to consumers will encourage more mobile deposits and, it is hoped, allow providers such as Vodafone Cash to negotiate better interest rates for their customers.”
According to the US-based Consultative Group to Assist the Poor (CGAP), a global partnership of organisations that seek to advance financial inclusion, Ghana’s move to allow mobile phone customers to earn interest on their mobile money wallets follows Tanzania’s lead – and other nations in the region could follow.
The CGAP said: “The Bank of Tanzania allowed mobile network operators (MNOs) significant influence in determining how customers benefited from the income MNOs earned on float accounts held by banks. The Bank of Ghana, however, has taken a more hands-on, prescriptive approach, by issuing mandates that MNOs had to react to rather than asking MNOs to make proposals.”
A report published earlier this year by the global mobile operators' association GSMA (73-page / 7.83 MB PDF) said “sub-Saharan Africa continues to account for the majority of live mobile money services (52%)”.
GSMA said growth in mobile money services in 2015 across West Africa “was dramatic, with Burkina Faso, Mali, Ghana, and Cote d’Ivoire all contributing to the substantive regional turnaround”. “In 2015, year-on-year growth in active (mobile money) agents was 60.1%, which was twice the growth rate of any other region.”
In March, the World Bank’s International Finance Corporation (IFC) said it had signed an advisory agreement with Fidelity Bank Ghana aimed at expanding agent and mobile banking in Ghana. “As part of the three-year advisory project, IFC will provide Fidelity Bank with strategic and technical advice for the expansion of the agent banking service,” the IFC said.