The Impact of Mobile Money on Financial Inclusion in Ghana

Abstract

Gradually, Ghanaians have accepted mobile money as one of the best means of internal remittances. The increase in mobile phone usage coupled with the ease with which telecommunication network subscribers can register for certain services like mobile money, have made it a household name in Ghana. Mobile money has enabled Ghanaians to transfer funds, pay bills, and sometimes school fees, anytime and anywhere, regardless of the subscriber‘s level of education. Arguably, mobile money has become one of the surest, if not the surest, payment system in Ghana. With almost 27 million Ghanaians (90% of the country‘s population) being served (Bank of Ghana, 2016) on mobile telecommunication technology in Ghana, and only about 58 percent of Ghanaians being banked, it is vital to examine the extent to which mobile money service influences financial inclusion. This study examined the impact of mobile money payment system on financial inclusion in Ghana using a sample from 16,772 enumerated households in Ghana from the GLSS R6. The paper used Logistic Regression Forced entry method to test the predictive ability of the variables in the model. The study found that mobile money subscribers have a higher likelihood of opening a bank account. This is because of the prevailing system that enables clients of both financial institutions and mobile money service providers to withdraw, deposit and make payments via either of them, at any given point in time. The study found that mobile money payment system, however, impacts on the possibility of households requesting for overdraft. It was also observed that the usage of mobile money service does not influence financial institutions‘ decision to grant loans to mobile money subscribers upon request. In conclusion, this study shows that mobile money is used not only for savings but also influences loan requests, and this evolution of mobile money expands in more mature markets. It has been observed that Ghanaians, over the years, are increasingly becoming more financially inclusive. This study therefore recommends that mobile Money Network Operators (MNOs) and banks should pursue more synergistic operating models that facilitate information and experience sharing, in order to develop a wider range of bank services that can be extended to mobile money users.