The Managing Director of one of Ghana’s leading private banks, CAL Bank, Mr. Frank Adu Junior has appealed to the central bank to immediately draw clear guidelines to regulate activities of telecommunications companies engaged in financial activities.
According to the respected Ghanaian banker, there is the need for an unambiguous policy direction outlining the extent to which telecom companies can involve themselves in active financial transactions beyond their core mandate of providing telecom services, citifmonline.com reports.
“I am calling for a policy direction, that’s all. I think that too many things are left to develop in this country without dimension. Look, today, one of them is advertising a loan product” he said in reference to recent adverts by some telcos, offering loans to their customers.
I am calling for a policy direction, that’s all. I think that too many things are left to develop in this country without dimension. Look, today, one of them is advertising a loan product.
“Its financial inclusion, it allows you to go borrow money from a mobile company, but it also says that I will charge up to 20 percent commission on the amount that you borrow for a month, that in financial terms is a 240 percent per annum interest rate on a borrowing. You think that should be allowed to happen?” he queried.
He warns that, the country should not in the name of financial inclusion crush confidence in the financial system, citing how the microfinance banking sector in the company entered a crisis after customers deposits were mishandled by an company.
“You cannot sit there and let that happen. The same way we sat there and let the microfinance companies evolved without restrictions under the same ambit of financial inclusion. Financial inclusion, we all go for it but it must controlled and be in the policy frame work,” he added.
Mr. Adu, posited that the central bank had to liaise with the National Communications Authority (the regulator of telcos in Ghana) to draw out the policies to regulate mobile banking which has recently become the preferred option of monet transfer across the country.
Meanwhile sources at the Bank of Ghana have hinted to Citi Business News that the Bank of Ghana is currently deliberating on financial activities of telcos in the country.
Growth of mobile money sector
Out of Ghana’s six mobile phone networks, three currently run mobile banking services, MTN Mobilemoney was followed by Tigi Cash and Airtel money. The mobile money sector has gained substantial increase in the value of transactions from a reported GH¢2.4billion in 2013 to about GH¢11.6 billion in 2014.
Records indicate that the value of mobile money transactions put into perspective came up to over a third of the total deposit liabilities of the 28 banks in the country as at the end of 2015. Mobile money transaction value has grown from GH¢171million in 2012 to a multi-billion cedi sector.
Most people in Ghana see it as the best and easiest and fastest means of sending money across the country, so much so that most banks have started offering the service even though it ends up chopping away some customers who want to avoid the hustle of banking processes.