BoG testing innovations on blockchain technology and others
The Bank of Ghana (BoG) within the regulatory confines of the SandBox Pilot programme is testing innovations on blockchain technology, funds transfer and conversion of cash into electronic money.
Innovations addressing the challenges of high inward remittance fees are also being tested.
“So far, innovations that seek to mainstream blockchain technology for trust kiosk that supports payments, funds transfer and conversion of cash into electronic money are being tested. Other solutions addressing the challenges of high inward remittance fees are in the offing,” asserts the Bank.
The disclosure by the Bank is contained in its assessment of the country’s two-decade old payments systems.
The SandBox Pilot programme was launched in 2020 to provide an enabling and inclusive regulatory environment that promotes financial technologies (FinTechs) and supports innovation.
The SandBox Pilot programme provides a supportive and controlled policy environment that enables firms particularly FinTechs to test innovative products, services and business models under the supervision of a regulator, to assess the usefulness, viability and safety of innovations in the financial services industry.
According to the apex bank, Ghana’s payment ecosystem over the last two decades has been transformed from a largely manual environment with serious inefficiencies to a network of interoperable digital payment streams supporting efficient, fast, convenient and round the clock funds transfer.
Adding that, the gains to financial inclusion and digital banking arising from the change has been phenomenal.
Touching on the development of Digital Financial Services (DFS) in the country, the Central Bank noted that recent events in the wake of the pandemic have brought to the fore the critical role of Digital Financial Services in promoting financial inclusion, business continuity and sustainability, particularly medium and small scale enterprises (MSSEs) and global trade.
Further asserting that, with the onset of the COVID-19 pandemic, a sense of urgency has been injected into Ghana’s payment ecosystem digitalisation effort and
necessitated a rethinking of the approach to Digital Financial Services (DFS).
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Ghana copied from Kenya use of mobile telephony in expansion of access to financial services – BoG
Meanwhile, the Central Bank of Ghana, says it took a cue from Kenya in the use of mobile telephony to expand access to financial services in the country.
According to the Central Bank, despite initially introducing the Branchless Banking Guideline in 2008 to lay the foundation for the adoption of mobile money led by banks, activity level in terms of the use of mobile money was low till telecommunication companies took over and made massive investments into the sector.
“The success of mobile telephony in expanding access to financial services in Kenya encouraged Ghana to adopt a similar system. As a consequence, the Branchless Banking Guideline was introduced in 2008 to provide regulatory support for banks to utilise mobile phone network to provide financial services in partnership with telecommunication companies.
“However, banks were required to own and invest in the product, with telecommunication partners only acting as agents, hence the bank-led model of mobile money. Four years after the first mobile money was introduced, activity levels were far below expectations and less exciting compared with the buoyant activities experienced by Kenya and Tanzania in the early stages. An impact assessment of the Branchless Banking Guidelines 2008 indicated considerable disincentives in the bank-led model, leading to underinvestment in the ecosystem.
“Extensive consultation with stakeholders, which commenced in 2012, led to the issuance of the Electronic Money Issuers Guidelines (EMIG) and Agent Guidelines (AG) in 2015, permitting a non-bank entity (telecommunication company) to establish a subsidiary to be licensed by Bank of Ghana to issue electronic money.
“The signal of policy change in the regulatory environment following the publication of the 2015 guidelines stimulated massive investments in the ecosystem by telecommunication companies and resulted in impressive growth in mobile money accounts and total volume of transactions from 3.78 million and 18.0 million in 2012 to 7.1 million and 113.18 million in 2014 respectively,” noted the BoG.
