Down Memory Lane: Evolution of Ghana’s Fintech Industry & the Urgent Need for Fit-for-Purpose Regulation

Not too long ago, sending money across regions in Ghana meant standing in long queues at banking halls, relying on paper forms, or using dubious third-party cash carriers.

Today, however, with just a few taps on a phone, millions of Ghanaians can pay school fees in Tamale from Takoradi, receive remittances from friends in Accra, or invest in mutual funds from their kitchen tables.

This transformation didn’t happen overnight. As detailed in a rich research paper by banking and finance consultant Dr. Richmond Atuahene, Ghana’s fintech journey began in the country as far back as the 1990s; however, its earnest penetration started in 2017.

Dr. Atuahene observes that it has since blossomed into a fast-paced, tech-driven ecosystem that is reshaping how Ghanaians interact with money and financial services.

The Rise of the Digital Wallet

The real fintech wave began with the surge of mobile money. What started as a simple way to store and send money on mobile phones quickly evolved into a sophisticated ecosystem enabling payments, savings, credit, insurance, and investment services.

The unprecedented growth of mobile penetration and internet access, combined with an entrepreneurial youth population, laid fertile ground for fintech companies to innovate.

The game changed further when fintech firms began partnering with Electronic Money Issuers (EMIs) and Specialized Deposit-Taking Institutions (SDIs). Suddenly, even the most remote communities could access digital financial services without needing a traditional bank account.

The banking consultant says the digital payment boom, led by mobile wallets and apps, became the hallmark of Ghana’s fintech revolution.

By April 2024, the fintech landscape boasted 46 licensed firms, including major players like MTN, and a range of Payment Service Providers (PSPs), EMIs, and Dedicated Electronic Money Issuers (DEMIs), according to the Ghana Fintech Report.

Why Regulation Became Urgent

But rapid growth came with its own set of challenges. As financial transactions increasingly shifted to the digital sphere, new risks emerged. Such threats include cybersecurity threats, data breaches, and fraud. There was also concern over how to ensure that consumer protection and financial integrity kept pace with innovation.

Recognizing these concerns, Ghana’s regulators began to step in. The Bank of Ghana enacted the Payment Systems and Services Act (Act 987) in 2019, establishing a legal framework to license and oversee fintechs.

In 2020, the Fintech and Innovation Office was born, dedicated to supervising emerging digital financial models while promoting safe innovation.

Dr. Atuahene’s research underscores that fintech’s impact was too big to ignore. With over 299.9 million mobile money interoperability transactions recorded by 2021, there was no turning back. But regulation had to evolve just as fast as innovation.

A Balancing Act: Innovation vs Oversight

Ghana’s approach to regulation has been largely adaptive and collaborative. The introduction of regulatory sandboxes. The sandboxes allow startups to test services under controlled supervision. This approach has been lauded as a smart move.

These sandboxes have enabled promising innovations without compromising consumer safety or market stability.

Still, experts warn that more is needed. Infrastructure gaps, cybersecurity risks, and talent shortages remain. Dr. Atuahene calls for continued investments in supervisory capacity, enhanced collaboration between fintechs and traditional banks, and a forward-thinking legal environment.

For Dr. Atuahene, the story of Ghana’s fintech journey is one of triumphs and trials. However, he maintains that as the industry matures, its success will depend not only on how fast it grows but also on how well it is regulated.

He insists Ghana now stands at a pivotal moment where the choices policymakers make today, particularly around regulation, will shape the next chapter of Ghana’s digital financial revolution.

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