New data finds Mobile Money ‘On the Cusp’ in Rwanda and Ghana
New data provides the most comprehensive picture yet of digital financial services (DFS) access and usage in Ghana and Rwanda.
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Financial Inclusion Insights surveys (FII) released on December 15 in both markets provide a nationally representative data on DFS that facilitates comparisons with other global leaders. Several key findings emerged from the surveys.
Rwanda and Ghana on similar trajectory
Similar proportions of the adult populations in Rwanda and Ghana are actively using mobile money. While 20 per cent of adults in Ghana now have mobile money accounts, Rwanda has 23 per cent of its adults having it.
Also 17 per cent of adults in both Rwanda and Ghana have their own mobile money accounts that were used in the last 90 days.
These figures position Rwanda and Ghana behind the three regional leaders, Kenya, Tanzania and Uganda, but ahead of many other countries where DFS is on the rise, although there are very different underlying conditions.
Most "DFS-ready" country
Ghana is the most "DFS-ready" country in Africa with 92 per cent of adults having the required identity cards (ID) necessary to open an account, 95 per cent have basic numeracy; 91 per cent own a mobile phone and 74 per cent already send and receive text messages.
In contrast, Rwanda faces bigger challenges in DFS readiness and in some ways is punching above its weight in the progress made so far: 87 per cent of adults have an ID necessary to open a financial account; 87 per cent of adults have basic numeracy; only 47 per cent of adults own a mobile phone and just 37 per cent send and receive text messages.
Rwanda also has poorer population than Ghana – 57 per cent of adults said they were unable to earn more than they spend each month in comparison with Ghana's 14 per cent.
Despite seemingly having all the ingredients in place, DFS has not reached the same penetration in Ghana as its East African counterparts. By the same token, Rwanda's success so far has occurred against the odds.
The story behind this is complex, but customer incentives are likely playing a big role in this scenario. In Rwanda, only 16 per cent of adults already have a bank account and mobile money is often their only option when it comes to formal financial services.
In Ghana, however, 34 per cent of adults already have a bank account, and 45 per cent of those individuals access it through mobile apps or the Internet. Since they are able to bank elsewhere, they may have less initial incentive to try mobile money.
There is cause for optimism in Ghana, however, as the Consultative Group to Assist the Poor (CGAP) estimates (based on supply-side numbers from providers) that the number of active users has increased about 2.5 fold in just one year.
CGAP expects this trend to continue, especially in the light of the new regulations passed in July 2015 and an awakening among policymakers of the critical role that mobile money plays in driving financial inclusion.
Mobile Money and Rwanda
In Rwanda, Mobile Money is a common source of financial inclusion. Encouragingly, mobile money is extending financial services to people in Rwanda who live on less than US$2.50 per day and/or in rural areas.
Of Rwanda's active mobile money account holders, 61 per cent live in rural areas and 72 per cent live on less than US$2.50 per day.
In Ghana, these numbers are tilted in the other direction – 60 per cent of active mobile money account holders live in urban areas, and 19 per cent live on less than US$2.50 per day.
Opportunity awaits
In both countries, the current dominant use case for mobile money is to send and receive payments to other people. In fact, over 40 per cent of active account holders in Rwanda used mobile money for the first time to receive money from another person.
However, an impressive 25 per cent of active mobile money account holders used it to pay bills (primarily electricity bills). This is higher than any other African country tracked by FII: The average for Kenya, Tanzania and Uganda is 17 per cent.
This highlights the biggest opportunity for mobile financial services: digitising existing payment streams and behaviours.
There are several examples of ways digitising payment streams could lead to increased usage of mobile money:
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* Insurance. Both Rwanda and Ghana have high rates of adults paying for insurance. Seventy-one per cent of adults report paying for insurance in Rwanda compared to 59 per cent in Ghana. However, just 0.1 per cent of adults pay for insurance via mobile money in both countries.
* Savings. In Ghana, 67 per cent of adults save, and in Rwanda, 35 per cent of adults save, but just one per cent do so via mobile money in each country.
* Wages. Nineteen per cent of adults in Rwanda receive wages from their employers (not counting self-employment), but only 0.3 per cent do so via mobile money. Similarly, 27 per cent of Ghanaian adults collect wages, but only 0.5 per cent do this through mobile money.
Mobile money can drive financial inclusion in these countries only if a range of services is offered by providers and subsequently used by customers.
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Conclusion
Both markets face challenges but also demonstrate considerable opportunity for expanding access and usage of digital financial services.
We hope the FII surveys give policymakers and providers new insights and ideas to overcome critical barriers and realise the potential of DFS in their markets.