The opportunity for mobile money person-to-government payments in Ghana
This blog was written jointly by Nic Wasunna and Amolo Ng’weno, East Africa Director at BFA and is the first in a two-part series.
We recently shared some lessons from Kenya’s person-to-government (P2G) payments experience, highlighting how mobile money has the potential to revolutionise how governments offer their services digitally. Ghana also stands out as a well-positioned market for accelerating the take-off of mobile P2G payments — but has yet to see results. In this blog, we will consider the fertile conditions for mobile P2G payments in Ghana and highlight some of the barriers, identified through our consumer research, that need to be overcome.
In Kenya, we identified three conditions that were valuable drivers of mobile P2G payments:
i. A thriving mobile money market: Like Kenya, Ghana has a thriving mobile money market with around 20 million registered customers, with nearly half actively using the services. An interesting statistic in Ghana is that, in a total population of 28.2 million, there are 34.3 million mobile connections, representing a 124% SIM penetration compared to Kenya’s 78%.
ii. A centralised platform for government payments: Just like Kenya’s e-Citizen platform, Ghana has an existing e-Government portal that offers services by government ministries, departments and agencies (MDAs) and an e-Payments portal that accepts digital payments through payment processing partners such as mobile money (through MTN, Vodafone and Airtel-Tigo), card payments (via Visa and MasterCard), payment switch (eTranzact) and bank transfers (through banks such as Zenith Bank and Ghana Commercial Bank). Payall collects and processes cash and cheque payment through service centres across the country, just like Huduma Service Centres in Kenya, although in the case of the latter, they also offer government services over and above receiving payments.
iii. Top-level support for the implementation of digital government services: In Ghana, this process started in 2003 with the implementation of the Ghana Accelerated ICT Development Policy. The Ghanaian government adopted e-government services in 2015 to improve service delivery, to promote the cashless economy, to drive accountability and transparency in accessing certified copies of birth certificates, marriage licenses and police background checks, and to facilitate online applications for passports and online tax filing, among other services. In Kenya, this was driven by a cross-functional taskforce created by the central government. Ghana was ranked 120 in the UN e-Government Development Index in a survey conducted in 2016, one point below Kenya.
Despite these favourable conditions, the participation and utilisation of e-Government services by citizens in Ghana is still very low; virtually all payments for government services are cash payments. This is in sharp contrast with the Kenya e-Citizen portal with over 4 million registered users making 500,000 monthly transactions, and Rwanda’s iRembo with over 2 million registered users making 300,000 monthly transactions. But why is this the case?
User experience and ‘Goro’ Middlemen
In focus group discussions conducted with users and non-users of mobile money in Accra by Bankable Frontiers Associates, we sought to understand why people would choose not to use the government payment portal. Three key insights emerged:
i. The process of obtaining nearly any government service is generally lengthy. However, complexity arises when citizens make late requests, therefore needing to bypass the usual process by using experienced and well-connected middlemen (locally known as ‘Goro Boys’). Middlemen go to the bank to buy application forms, help fill out forms, wait in line at the government office, make payments and, in many cases, speed things along, reducing service delivery time from months to days.
ii. The payment mechanism itself is a minor inconvenience for citizens and the amount payable for services is actually unknown to most users of government services. The middlemen take a fixed fee, which includes their cost of time, payment for the government service and any inducements.
iii. Additionally, previous downtime of the various platforms used was also reported as a contributing factor to citizen demotivation for P2G payments using mobile money, just as we found in Kenya.
“I paid a total of GHS 150, but the true cost was GHS 60. I actually got to know about the cost when I received an SMS alert from the registrar as receipt for the payment.”
– Ghana government service customer
“I knew the amount for the passport was GHS 300 so we put aside that money and he [middleman] said he was going to [charge] GHS 200 and was even demanding for more. I paid GHS 800 aside from buying the forms for GHS 100 and got it in three days.”
– Ghana government service customer
End-to-end processes are still largely manual
Services offered by the majority of MDAs in Ghana are already available and active in the e-Payments portal, which offers mobile money as a payment option. However, services are still characterised by low digital volumes owing to parallel manual processes and extensive physical documentation checks conducted over the counter. For example, even though the Driver and Vehicle Licensing Authority (DVLA) allows an application to be made online, a citizen still must appear in person to complete the application for a driving test. The DVLA service site is also not fully integrated with the e-Payments portal (see Figure 1). This contrasts with Kenya, where the National Transport and Safety Authority (NTSA) fully digitised its driver’s license application, renewal, payments and verification process, where one only needs to appear physically for the tests but can download and print the renewal certificate remotely thereafter.
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