Making Sense of Mobile Money in Urban Ghana: Personal, Business, Social, and Financial Inclusion Prospects

By Vivian Afi Dzokoto based upon her IMTFI-funded research project with Elizabeth Appiah

The goal of the current study was to explore personal, business, and social money-related practices that have emerged with increased patronage of mobile money (MM) in Ghana.  Of particular interest was the impact of MM on the urban poor who so far (based on previous research) appear to be the sector of the population that is the least aware of MM and the least likely to use it in their daily lives.

We (i) investigated MM 2012 uptake patterns, in year three of its re-introduction to Ghana, (ii) explored the social and cultural interfaces between MM and existing money behaviors, and (iii) investigated the internalized (cognitive) representations of MM that Ghanaians have developed. The study focused on the segments of the Ghanaian population and behavioral practices that were perceived as both included and excluded from the MM adoption process. Research to answer these questions was conducted using surveys, spending diaries, interviews, and analysis of secondary data.

"Transfer Money Instantly to Loved Ones with Mobile Money" (retrieved July 3, 2013 from  http://m.myjoyonline.com/pages/business/news/201304/104850.php)

Highlights of Results

Study 1: Adoption of MM into Personal Financial Practices, A Quantitative Inquiry

Monetary Preferences Study: Cash was the most preferred monetary tool in a college student sample. Prepaid phone cards were preferred over other cashless forms, and MM was preferred over many other forms of cashlessness and also higher denominations of cash.

Spending Diary Study: In a college student sample, cash was the predominant form of payment for daily expenses while non-cash transactions made up 2.86% of reported purchases. MM accounted for less than 1% of transactions.

Mobile Money Use Population Survey: 14% of respondents reported using MM at least once in order to receive a money transfer and/or send a money transfer, pay bills, make purchases of goods, and purchase airtime. MTN was the most popular mobile network operator (MNO).

Industry Data: Participants in the MM industry reported an increase in transaction frequencies and the volume of transactions over the course of the fiscal year.

Study 2: Adoption of MM into Personal Financial Practices, A Qualitative Inquiry

Interviews with Individuals in the MM industry: Interviewees cited regulatory, agent, educational, pricing, and profitability issues as barriers to MM uptake, but respondents were optimistic about the potential for growth in the MM industry in Ghana.

Interviews with Consumers (both users and non-users of MM): Participants expressed an overall preference for cash over MM, and displayed a lack of trust of MM, yet basic knowledge of MM was higher than in previous years.

Interviews with Early Adopters: First use of MM occurred in a situation where the individual had an urgent need to send money to someone in another part of the country. Nine out of 10 participants used MM again after this initial experience.

Interviews with Retailers: Retailers predominantly used cash over MM in commerce because of lack of trust (e.g. mobile network problems and concerns about fraudulent activity), yet knowledge of MM among retailers had increased.

Mobile Money in the Church: The nature of MM (intangible and mobile-phone based) made it undesirable for incorporation into church activities (including funerals and weddings).

Conclusion

The results of this series of studies revealed the following:

1. Cash is King in Ghana: Cash is still the main form of payment for day-to-day purchases. Large payments generally involve involvement of the formal banking sector. Cashless payment forms have not yet begun to dominate the payments scene.

2. MM knowledge and use has increased, but MM has not become a major means of payment for goods and services, or for savings.

3. MNOs have increased the number of MM products available to the public, slowly creating a MM ecosystem. However, apart from money transfer, this ecosystem is largely targeting the middle and upper classes.

4. Barriers to MM uptake remain: Information gathered from interviews indicates the persistence of regulatory, partnership, and educational barriers that hamper the growth of the MM industry in Ghana.

In conclusion, the answer to the question of how Ghanaians from different socio-economic backgrounds are making sense and use of MM in urban Ghana in their personal, business, and social lives is a simple one. The use of MM is increasing over time, and the commercial settings in which MM can be used are slowly growing due to the development of new products and business partnerships, but cash remains the major means of payment in urban Ghana. Also, the majority of the MM products are aimed towards the middle and upper classes to the exclusion of lower income groups. For instance, willingness to use MM especially in markets was low at the time of data collection. It is therefore hoped that as the MM ecosystem grows, new products that benefit lower income segments of society will be developed.

Socially, MM is gradually establishing itself as a means by which individuals can fulfill their financial obligations to extended family members in financial need.  Apart from sending remittances, however, these series of studies indicate that MM has not widely permeated the social sphere, and thus has not had a salient impact on social life (e.g. churches, funerals, weddings) so far. Whether or not this will change over time remains to be seen.

1. Link to their final report: Making Sense of Mobile Money in Urban Ghana: Personal, Business, Social, and Financial Inclusion Prospects.

Journeys for Water: A report on water ATMs in urban India

By Jan Chipchase on the IMTFI-funded Sarvajal project in collaboration with frog Design

Last week researchers from the IMTFI-funded Sarvajal project were on the road in Mumbai, Delhi and Ahmedabad to share the research, connect to others in the space, and to learn about what was going on on the ground. You can download the report titled "Journeys for Water: Survival Strategies in Urban India" by Gaurav Bhushan, Nitin Gupta & Jennifer Lee Fuqua here.

Photo credit: frog.

The team spoke at the Godrej India Culture Lab, the Indian Institute of Management and the National Institute of Design and as well as a number of smaller private events, engaging audiences from the design, innovation, industry, social impact space as well as those involved with the water and financial inclusion space. As researchers we pour a lot of energy into the final deliverables, but these talks were a reminder of how much further the conversation still has to evolve, and the breadth of talent from stakeholders and people available and wanting to explore a career in social impact work.

You might ask what the IMTFI is doing funding research into a "water" project. It's a valid question. As more of what people do is shifting to digital stores of value, how will the poor, who traditionally enjoy physical assets such as goats, gold and grain, feel about storing money in something as abstract as a pre-paid RFID equipped card? Our research suggests that for relatively small sums it seems to be ok for now (it might become more complicated if competitors or other service providers start introducing similar designs). We think that this new, abstract form of value will be not be the barrier to adoption for a service as long as Sarvajal ATMs provide clean drinking water at affordable prices. There are of course other issues related to the technology and existing social and political practices that are difficult to overcome.

Sarvajal's Water ATM. Photo credit: frog.

In presenting we were mindful of the boundaries of our role in this project. The Sarvajal team, and the Piramal Foundation that funds it were kind enough to invite us in and conduct the research; the difficult job is done by their team in bringing it to market. Having started in rural India, the Sarvajal team is now scaling their pilot in urban India. It will be interesting to see how it evolves, and what new insights can be formed by the transitional data that they are now collecting.

Banking the poor through mobile telephony: Understanding the challenges for expansion of mobile-based financial services in El Salvador, Guatemala, Paraguay, and Peru

This is an excerpt from a final report by Roxana Barrantes and Alvaro Grompone based upon their IMTFI-funded research project investigating financial inclusion efforts in Latin America through the expansion of mobile financial services.

There is growing consensus that banking the poor in developing countries could accelerate with the use of mobile telephony platforms. A simple comparison of the number of mobile telephony subscriptions and the number of bank accounts among people at the bottom of the pyramid shows an impressive discrepancy in favor of the former. What would be needed for every mobile telephony subscriber to also become, with that tool, a user of the financial system?

The answer to that question requires consideration of issues related to supply and demand. The latter include typical self-exclusion mechanisms due to risk aversion. Among supply-side considerations, we should determine why financial institutions do not partner with telecommunications enterprises to offer access to their service, and related questions.

This study explores these supply-side considerations. We adapted a methodology developed by Samarajiva (2005) and LIRNEasia (2008) to evaluate the regulatory environment for telecommunications and the extent to which it promotes investment in various components of the ecosystem necessary for the development of mobile financial services (MFS), as conceptualized by the World Economic Forum (2011). The methodology consisted of identifying private sector stakeholders who are important for development of the MFS ecosystem and asking them to respond to a questionnaire that evaluated various dimensions of the ecosystem on a Likert scale ranging from 1 (very ineffective) to 5 (very effective). This rating was corroborated with in-depth interviews, as well as an objective prior assessment of each dimension to be evaluated. The experts were grouped into three categories according to their ties with the sector, with each category given equal weight in the final result.

The ecosystem for MFS deployment is divided into three environments, each consisting of several dimensions. The first environment is institutional, consisting of six dimensions: (i) financial sector regulation for MFS; (ii) financial sector regulation contributing to financial inclusion; (iii) telecommunications sector regulation for MFS; (iv) telecommunications sector regulation contributing to financial inclusion; (v) coordination and joint policies for MFS; and (vi) consumer protection in MFS. The second is the market environment, consisting of five dimensions: (i) competition in the financial sector; (ii) competition in the telecommunications sector; (iii) innovation in the telecommunications sector; (iv) government leadership in MFS; and (v) management of data about beneficiaries of social programs. The last is the end-user environment, consisting of three dimensions: (i) support infrastructure for non-bank correspondents; (ii) network penetration of banking agents; and (iii) management of data for attracting new financial users. The experts identified were asked to assess each of these fourteen dimensions.

Read results of each case study in English and Spanish, available on the DIRSI website.