The Impact of Fintech on Ghana’s Economic Growth

Ghana stands out as a compelling case where fintech has driven economic growth, financial inclusion, and overall development. This article explores the multifaceted impact of fintech on Ghana’s economy, corroborated by relevant figures and case studies.

Financial Inclusion

Mobile Money Services: Mobile money services have become the foundation of financial inclusion in Ghana. Platforms like MTN Mobile Money and Vodafone Cash enable millions of Ghanaians to perform financial transactions using their mobile phones. According to the Bank of Ghana, the number of registered mobile money accounts grew from 23.9 million in 2017 to 49.7 million in 2021. This represents a significant penetration rate given Ghana’s adult population. What is more, in terms of transaction count, a staggering GHS 372 million transactions per month in January 2022, further ballooned to GHS 657million transactions per month as of close of 2023.

The value of mobile money transactions also surged dramatically, increasing from GHS 35.4 billion in 2015 to GHS 978.32 billion in 2021. This growth highlights the importance of mobile money in facilitating financial transactions and improving financial accessibility for the broader population.

Digital Payments: Fintech solutions have simplified digital payments, allowing individuals and businesses to transact seamlessly in the comfort of their homes and offices. The interoperability of mobile money services in Ghana, introduced in 2018, has further enhanced convenience. By 2021, interoperability transactions reached GHS 299.9 million, illustrating the system's growing acceptance and use.

Economic Efficiency

Microfinance and Lending: Fintech companies offer microfinance and lending services, providing access to credit for individuals and small businesses that may not qualify for traditional bank loans. These services are crucial for fostering entrepreneurship, supporting small and medium-sized enterprises (SMEs) and adding a facelift to financial inclusion. The Ghana Microfinance Institutions Network (GHAMFIN) reported that fintech-driven microfinance institutions served over 5 million clients by 2021, with a loan portfolio exceeding GHS 2 billion.

Cost Reduction: Fintech solutions help reduce the cost of financial transactions by eliminating intermediaries and leveraging technology to streamline processes. This efficiency translates into lower costs for consumers and businesses, ensures relatively quicker turnaround times while enhancing economic activities. A World Bank report indicated that digital payments could reduce transaction costs by up to 90%, significantly benefiting Ghana’s economy.

Regulatory Support

Government Policies: The Ghanaian government has been supportive of the fintech sector, implementing policies and frameworks to encourage innovation and protect consumers. In 2020, the Bank of Ghana launched the Fintech and Innovation Office to oversee and promote the Fintech ecosystem. This office ensures that regulatory measures are adaptive and conducive to fintech growth.

Sandbox Initiatives: Regulatory sandboxes allow fintech startups to test their innovations in a controlled environment under regulatory supervision. This approach helps balance innovation with consumer protection and regulatory compliance. The sandbox framework, introduced in 2019, has enabled numerous fintech startups to develop and refine their products, contributing to the sector's dynamism.

Economic Growth

Job Creation: The fintech sector has created numerous jobs in Ghana, from technology development to customer support. According to the Ghana Statistical Service, the fintech sector employed over 10,000 people directly by 2021, with indirect employment effects benefiting many more.

Foreign Investment: Ghana’s thriving fintech ecosystem has attracted foreign investment, which fuels further innovation and expansion. In 2021, Ghana received over $200 million in fintech-related foreign direct investment, highlighting the sector's attractiveness to global investors.

Private Equity Firms and Venture Capital

Private equity firms and venture capital (VC) play a crucial role in the growth of Ghana’s fintech sector. These investors provide the necessary capital for fintech startups to scale their operations and innovate. In 2021, the total VC investment in Ghana's fintech sector was approximately $140 million, marking a substantial increase from previous years. Notable investments include the $13 million Series A funding round for Zeepay, led by Goodwell Investments, and the $8.5 million raised by ExpressPay from private equity firms.

Consumer Experience and Trust

Improved Customer Experience: Fintech companies consistently improve the experience of their users through personalized services, best turnaround time on transactions, and user-friendly interfaces. Enhanced customer experience improves customer engagement and economic activity.

Trust and Security: Innovations in cybersecurity and fraud prevention by fintech companies help to protect customers and businesses, earning trust in the financial system encouraging more people to participate in digital services.

Case Studies and Examples

ExpressPay: ExpressPay is a leading fintech company in Ghana that offers a wide range of digital financial services, including payments, remittances, and airtime purchases. By 2021, ExpressPay had processed transactions worth over GHS 1 billion, demonstrating its significant role in the digital economy. The company’s growth has been supported by substantial private equity and VC investments, enabling it to expand its service offerings and reach.

Zeepay: Zeepay focuses on remittances, allowing Ghanaians in the diaspora to send money home conveniently. In 2021, Zeepay processed remittances worth $400 million, contributing significantly to the flow of remittances, which are a vital source of income for many households in Ghana and foreign exchange for the economy. The company's growth has been bolstered by investments from venture capital firms, highlighting the importance of external funding in scaling fintech operations.

Challenges and Future Outlook

While the fintech sector in Ghana shows great promise, challenges such as cybersecurity threats, infrastructure limitations, and the need for continuous regulatory adaptation remain. Addressing these challenges will be crucial for sustaining growth and maximizing the benefits of fintech. Furthermore, increasing collaboration between fintech startups and traditional financial institutions can drive further innovation and market penetration. Fintech is a driving force in Ghana’s economic growth, enhancing financial inclusion, economic efficiency, and overall development. With continued support from the government, increased private equity and venture capital investment, and ongoing advancements in technology and infrastructure, the fintech sector in Ghana is poised for further expansion and impact. The data and case studies presented illustrate the significant strides made and the potential for future growth in this vibrant sector.

Hakeem Shaibu,

Senior Vice President, Telecoms, Media & Tech and Diversified Industries,

Corporate & Investment Banking - Stanbic Bank Ghana.