Ghana Mobile Money Penetration-Propel iGaming Betting

In the past few years, mobile financial service’s phenomenal growth in sub-Saharan Africa has defied all expectations. The genesis of mobile money as been credit to the Fintech revolution.

Its appeal quick adoption, initially in Kenya and now, in over 30 African countries, has primarily been due to its democratization of financial service. The digital transformation the region has been experiencing in the last few years has seen sectors such as the iGaming and the e-commerce boom in Africa.

Ghana is one of the countries in the region that is experiencing such a bang. With a report published in 2019, According to iGaming Intelligence Specialist H2 Gambling Capital, the African online gambling market’s total value reached an estimated US996 million in 2019. It is showing continuous growth since the company started following its value in 2012. However, the transformation of mobile money is evident in Ghana recently become the fastest mobile money market penetration in Africa, according to a World Bank report June 2019, with the total registered accounts increasing six-fold between 2012 and 2017. The country’s experience merchant fresh perspective on its digital transformation demonstrates that technology can help modernize the financial system and support greater financial inclusion.

In Ghana, the proportion of those using mobile financial service are people poorly served by the traditional financial sector. The 2017 Global Findex database indicates that access to formal financial services rose from 41% of adults in 2014 to 58% in 2017. These are primarily attributed to mobile accounts, with 20% of digital-wallet users being previously unbanked. These now represent about 40% of all accounts holders compared to 13% in 2014. Still, mobile money rise, which many factors explain the rapid progress of mobile money use in Ghana. First, the healthy penetration rate of mobile phones, about 128% of the population, the widespread acceptance of mobile money services is standard, particularly in rural areas. Secondly, the popularization of sports betting is a mainstream culture of the average young Ghana population where betting using a mobile device as skyrocketed in recent years, especially during the lockdown caused by the outbreak of COVID-19, sees demand for online service increased.

One sector that benefited is the iGaming industry, where most gaming companies accept payment from mobile money merchants. Thus, this success can be said to the government’s reform put in place to capture the financial exclusion population and enable transactions between other mobile money services possible. The reform 2015 e-Money Issuer Guidelines shifted to a more flexible approach that previously restricts gaming companies and non-bank actors. The new regulatory process sees new players in the provision of financial service. More scope for experimentation, such as mobile network operators, took it to a greater height and created a framework adapted to users’ and operators’ needs.

The Ghana authorities took other vital initiatives in supporting the development of innovative payment technologies. According to the World Bank Economic update, the expansion of agent distribution network from around 6,000 agents in 2012 to more than 150,000 in the 2015-was key to unprecedented growth for sectors such as gaming companies that allow more cash-in and cash-out opportunities and overall convenience of using mobile money. In May 2018, Ghana launched one of Africa’s first interoperable systems, allowing transactions between different mobile telephone service providers. The interoperability payments reached $57 million by the end of March in 2019.

By 2020 the volume of mobile money interoperability (MMI) transactions jumped over 444 percent in the first half of this year. Compared to the same period last year, especially during the lockdown in Ghana, according to the Ghana Interbank Payment and Settlement Systems (GhIPSS) Half year performance report, MMI transactions from January to June stood at 13.8 million compared to 2.5 million recorded in the same period last year. The user adoption of mobile banking is also increasing, but has been limited by restricted merchant acceptance 2.7 million cards have been issued and 7.7 million transactions handled, representing 2% of Ghana’s GDP. Although most payments are immediately cashed out, 53% have residual value. Ghanaians have so far used mobile wallets principally for transferring money to a person (peer-to-peer).

In contrast, payments for other products and services such as gaming firms and e-commerce platforms, among others, according to Bank of Ghana data, the total value of all mobile money transactions reached $26 billion in 2017 compared to $6.5 billion in 2015. Consequently, the range of mobile-accessible goods and services has successfully expanded to the purchase of mobile communication credits, payments to the online betting account, public service bills, and salaries. Thus, with the mobile money penetration and the surge in iGaming betting growth, especially during the country’s lockdown. In recent years, the Ghana Gaming Commission realize that a move to regulate the sector is paramount after seeing other neighboring West African countries like Nigeria. The success there has achieved seeing the number of gaming companies that have established iGaming operations. The potential revenue there could be derived from the sector.

Regarding this, the 2006 Act that regulates all forms of sports betting, casino gambling, and other related game of chance under the Gaming Commission in charge was formed under the Interior’s ministry. The 2006 Gaming Act 2006 (Act 721), the Act legalizes all forms of Games of Chance in Ghana except Lottery. The Act empowers the Commission to discharge its functions to acquire and hold any movable or immovable property and enter into contracts or other transactions. The gaming industry in Ghana was previously regulated under the Lotteries and Betting Act, 1960 (Act31), the football pools Authority Act 1961 (Act78), while the Gambling Machines Decree 1973 (NRCD 174) and Casino Licensing Decree 1975 (NRCD 320) until the Gaming Commission’s establishment. Hence the Act did not address the unique iGaming betting in Ghana. Even though this move to regulate iGaming has been in contention in recent years with several stakeholders advocating for change in the country’s gaming Act to cater for the proper regulation of the iGaming and gambling in Ghana.

Despite the shortcoming of the Ghana gaming Act, significant sports betting and casino companies have established their operations in the country, such as Betway, offering online service to meet the young Ghana population’s demands. In which the proportion of the population has access to mobile subscriptions coupled with mobile money acceptance has grown exponentially, and we can say the success so far is due to reforms to mobile money service in the country as proliferate iGaming betting and gambling in the country.

Article published in the 3rd issue of Magazine E-PLAY Africa

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