JULIAN OPUNI shares his rich insight with the Oxford Business Group on Ghana’s commitment to inclusive finance.

OXFORD BUSINESS GROUP: How has the Ghana identification card impacted the financial sector?

JULIAN OPUNI: The Ghana Card has significantly benefitted Ghana’s financial sector by enhancing security and reducing risk. It serves as a robust means of identity verification featuring advanced biometric features, real-time data requests, and seamless integration with complementary systems – reducing the risk of identity theft and fraud. The card’s integration with government databases improves customer information accuracy, aiding in Know Your Customer (KYC) compliance and anti-money laundering efforts.

The centralised approach fosters collaboration between financial institutions and regulators, fortifying the sector’s collective security. Moreover, the Ghana Card’s integration with innovative financial services catalyses innovation on digital platforms. Serving as a secure form of identification, it facilitates easy engagement in digital transactions, including mobile banking and electronic payments.

Traditional and financial technology (fintech) institutions can leverage the comprehensive database to offer diverse financial services, promoting cashless transactions. These advancements contribute to a more inclusive financial ecosystem by removing barriers to entry, especially for the economically disadvantaged. By streamlining the online and in-person account opening process, the Ghana Card provides accessible formal identification, particularly for those in remote areas.

OBG: What are the main challenges faced by financial institutions as a result of the Domestic Debt Exchange Programme (DDEP)?

JO: The DDEP posed significant challenges for Ghana’s financial sector, leading to substantial restructuring costs for both individuals and institutions. Moving forwards, outcomes are expected to vary, presenting a spectrum of possibilities that encompass both opportunities and pitfalls. The impact on lending is complex, with the DDEP emerging as a pivotal factor influencing lending rates and volumes. Immediately following the programme, incurred losses coincided with a notable credit contraction, indicated by a 7.5% reduction in credit in October 2023 compared to the same period in 2022. Realistically, the tightening was more pronounced, with a 32% decrease in credit in October 2023, contrasting with a 3% growth in the corresponding period in 2022. This decline occurred amid a backdrop of rapidly rising borrowing rates, adding further pressure on lending.

Looking ahead, there is potential for a rebound in private sector lending and investment. The DDEP has reshaped the risk profile of public sector financial instruments, prompting banks to view private sector credit more favourably. As the macroeconomic landscape and business sentiment gradually improve, coupled with decreasing borrowing and inflation rates, private sector credit may become more attractive for banks deploying their assets.

OBG: To what extent are Ghanaian banks succeeding in deepening financial inclusion?

JO: Financial inclusion stands as a paramount objective for Ghanaian banks, underscoring its pivotal role in fostering economic growth and curbing inequality. This commitment materialises through multifaceted strategies and collaborative endeavours aimed at broadening access to banking services across all demographic segments.

Technological innovation serves as a cornerstone, with banks harnessing mobile banking, digital wallets and fintech solutions to transcend traditional branch networks. These digital channels offer convenient and cost-effective access to basic banking services for individuals in remote or underserved areas. Collaboration emerges as another linchpin in the sector’s financial inclusion strategy, with active partnerships forged among banks, governmental and non-governmental organisations, and fintech firms. This collaborative synergy amplifies the impact of financial inclusion initiatives, leveraging collective strengths and resources to reach a broader population.

Moreover, a dedicated focus on financial literacy and education programmes ensures that access to services is complemented by informed decision-making. Empowering communities with financial knowledge fosters a culture of saving and responsible financial behaviour.

Stakeholders are increasingly diversifying products to cater to diverse customer segments, including tailored solutions such as microfinance and small-scale loan products for small and medium-sized enterprises and previously underserved individuals. Streamlining account opening processes, simplifying documentation requirements, deploying low-KYC smart accounts, and reducing entry barriers constitute essential components of a robust financial inclusion strategy –facilitating access to basic banking services and particularly for rural populations. Concurrently, the growth of agency banking utilising a widespread network of mobile agents extends tailored services to those previously categorised as unbanked or underbanked, creating a more inclusive financial landscape in Ghana.

• Opuni is Managing Director, Fidelity Bank Ghana