The past year has been a year of exciting initiatives for Ghana’s digital infrastructure. The Government has adopted digitization as a key policy objective and has recently introduced a number of programs designed to develop a more digitally accessible public sector and encourage transparency and efficiency, in order to drive growth in all aspects of the country’s economy.
The private sector is also playing its part. In his recent mid-year fiscal policy review of the 2021 budget statement and economic policy, the Minister of Finance, Ken Ofori-Atta, observed that the use of mobile money, door to door delivery via courier services and internet usage for business operations has increased significantly with about 77 percent of businesses increasing the use of the internet in marketing, compared to 19 percent during the lockdown period.
As the ongoing COVID-19 pandemic continues to make digital innovation a priority in Ghana and internationally, this article looks at some of the recent initiatives that are putting Ghana at the cutting-edge of developments in this space.
On 11 August, the Bank of Ghana announced that it had partnered with Giesecke+Devrient to pilot a retail central bank digital currency in Ghana. The Bank of Ghana confirmed that the digital currency – the e-cedi – is intended to complement and serve as a digital alternative to physical cash. During the pilot phase, the e-cedi will be tested with banks, payment service providers, merchants, consumers and other relevant stakeholders.
This announcement followed the address given by the Vice President, Dr Mahamudu Bawumia at the recent Ghana International Trade and Finance Conference in Accra, in which he commended the Bank of Ghana’s move to introduce the e-cedi and encouraged other African governments to embrace digital currencies as a route to economic growth. In particular, Dr. Bawumia advocated the use of digital currencies alongside the implementation of the Pan African Payment and Settlement System (PAPSS) to become a priority for central banks across Africa. PAPSS is a central payment and collection infrastructure developed by the Africa Import-Export bank that would allow businesses to clear and settle transactions in local currency.
By reducing payment friction between businesses across the continent, PAPSS is intended to reduce costs, avoid delays and time variability, and allow companies to make the most of the opportunities for cross-border trade presented by the AfCFTA.
In addition to its work on the e-cedi, the Bank of Ghana recently launched a regulatory and innovative “sandbox” pilot. The sandbox pilot will be available to banks, specialised deposit-taking institutions and payment service providers including dedicated electronic money issuers. The program is intended to provide a forum for financial sector innovators to interact with the sector regulator to test digital financial service innovations while helping to grow the regulatory environment and expertise.
Certain innovations have been specifically earmarked to benefit from the program, including new digital business models which are not currently covered by any regulations and new digital financial service technologies and products which have the potential to address a persistent financial inclusion challenge.
The program reflects the Central Bank’s commitment to creating an inclusive regulatory environment for the growth of fintech and to support innovation in the country.
It is hoped that the sandbox program will drive financial inclusion by facilitating innovative financial services by allowing regulators to learn about innovations faster, encouraging innovators to formalize their businesses, and incentivizing incumbents to experiment with new ideas in a bespoke regulatory environment with a reduced time-to-market.
Bank of Ghana Policies to Accelerate Digital Financial Inclusion.
The e-cedi and the fintech regulatory sandbox are among several measures introduced by the Bank of Ghana under its FinTech and Innovation Office that are designed to accelerate digital financial inclusion to reduce the impact of COVID-19 on individuals and businesses. Other measures include Tiered Licence Categories, Merchant Account Categorisation, the GhQR and Mobile Money Interoperability (“MMI”).
Digital Payment Platforms
The widespread adoption of mobile money and other digital payment systems in Ghana has led to a number of state institutions adopting digital payment platforms to facilitate payment for public sector services. For example:
Digitization of Records
In addition to payment systems, 2021 has seen the continuation of efforts to digitize record keeping in Ghana. In particular:
The RGD conducted a four-day exercise in April 2021 that involved a step-by-step overview of all the current processes for registration and dissolution of businesses in Ghana. The exercise forms part of the existing technical assistance support from the International Finance Corporation (IFC) under the Ghana Investment Climate Advisory Programme and is funded by the Swiss Economic Cooperation Secretariat (SECO). The modified software system is intended to reform businesses and company registration in Ghana in line with international best practices.
This project will play a key role in the implementation of Ghana’s new Land Act, which received presidential assent on 23 December 2020 and introduced provisions catering for electronic conveyancing.
Integration of Government Records
2021 has also seen further progress on the integration of public sector records, building the creation of the National Identification Authority (“NIA”) and the “Ghana Card” scheme.
As these processes continue, managing and protecting data will continue to be a major risk issue. It will be critically important for the Government, businesses and all other stakeholders to manage data protection and cybersecurity concerns, including the requirements of the Data Protection Act, 2012 (Act 843), the Cybersecurity Act, 2020 (Act 1038) and other relevant legislation.