At UNCDF MicroLead’s March 2016 knowledge management conference, Innovative Pathways toward the Last Mile, Ms. Buddy Buruku from the Consultative Group to Assist the Poor (CGAP) presented CGAP findings on financial inclusion. She highlighted the nexus between mobile money and traditional banking, focusing on Ghana. The country is relatively “banked” compared to other countries in sub-Saharan Africa. In 2015, about 36% of Ghanaians had access to bank accounts, while Kenya has 28% and Uganda just 14%.

In Ghana, financial inclusion has increased in the past five years, driven by non-bank formal services such as mobile money. Increased access to mobile money is leveling the playing field, bringing financial access to traditionally underserved Ghanaians, such as the poor, women, youth, and rural populations.

According to Ms. Buruku, mobile money has a strong impact on improving the lives of the vulnerable alongside with traditional banks and other financial institutions, especially when it is the point of entry for these groups into the formal financial sector. For the poor, for women, for youth, and for rural populations, mobile money is a great equalizer to increase financial inclusion for such groups.

The next logical step towards further inclusion is to layer more services onto mobile money so that more youth, more women, and more rural populations have financial access. Additional products and services that can be layered with mobile money are those such as insurance products, loan and savings products, merchant solutions, and energy solutions. Including these services with mobile money would mean that these types of services would be available to a large number of individuals for the first time.

Though there is a perceived strain between traditional banks and mobile services, CGAP’s findings point to a strong overlap between those with bank accounts and those with mobile money accounts. “There is no competitive space where both traditional banks and mobile money cannot co-exist,” said Ms. Buruku. Many prefer to have both bank and mobile money accounts. In Ghana, for example, twenty percent of “banked” people have both a bank account and mobile money account. In Kenya, 45% have both types of accounts (and only 1% have just one type of account).

CGAP has found that as bank accounts increase, mobile money accounts also increase. Banks complement mobile money and mobile money complements banks. This is an inclusive ecosystem in which the primary focus is providing more services to the poor. With improved access and services, everyone benefits.

In terms of active mobile money accounts, Ghana lags behind a number of other countries with just 20% access to such accounts, versus in Kenya, where 63% of the population has access to mobile money. But the situation in Ghana is improving, and the percentage of those with IDs, basic numeracy skills, mobile phone ownership, usage of smart phones and technological ability are the highest of countries surveyed.

There are now four players in Ghana’s market, and competition is set to increase, offering customers a variety of options and expanding services into rural and underserved areas and groups. Looking at the performances of other countries’ such as Kenya and Tanzania, Ms Buruku indicated that mobile money represents a huge potential to further financial inclusion beyond the current status to higher level “with additional seven millions adult Ghanaians to be included”. Given the dynamic stewardship of the Bank of Ghana with the issuance of e-money regulations, and the efforts of providers and development partners in improving mobile money services, CGAP is confident these additional seven million Ghanaians will be reached.

For more information, see www.cgap.org/blog/series/2015-financial-inclusion-insights-survey-rwanda-and-ghana