MICROFINANCE PAPER WRAP-UP: CGAP: “Building Inclusive Payment Ecosystems in Tanzania and Ghana;” by Max Mattern, Claudia McKay

This is a summary of a paper by Max Mattern and Claudia McKay, published by CGAP (the Consultative Group to Assist the Poor), June 2018, 35 pages, available at:
http://www.cgap.org/sites/default/files/Focus-Note-Building-Inclusive-Payment-Ecosystems-June-2018.pdf

This report addresses how advances in technology over the past decade have expanded financial options for individuals in less developed countries. The main focus is on mobile money services (MMS) in two countries in which mobile money has become popular, Tanzania and Ghana.

As of 2009, 1.1 percent of people in Tanzania were using mobile money. By 2017, that rate had risen to 60 percent. This growth was enabled by the government of Tanzania deciding in 2008 to “allow MNOs [mobile network operators] to launch their own payments services through the issuance of letters of no objection.” This choice mimicked a strategy that Kenya had used previously. The major MMS service providers in Tanzania are M-Pesa, which is controlled by UK-based Vodafone, and Tigo Tanzania, which is a brand of Luxembourg-based Millicom.

In the early days of MMS, the government of Ghana only allowed banks to issue electronic money and create MMS relationships with MNOs. After a few years of sluggish results, in 2011, Ghana adopted the path of Tanzania and Kenya, allowing non-banking institutions to offer MMS. The portion of people in Ghana using mobile money began to grow significantly – from 13 percent in 2014 to 39 percent in 2017. As of that year, South Africa-based MTN has a market share of approximately 75 percent in Ghana. Its competitors include India’s Airtel and Tigo Ghana.

The report closes with additional comparisons between Tanzania and Ghana on factors such as regulatory approach, competitive landscape, interconnectedness of services, “compelling use cases,” and executive commitment and investment.

By Michelle Fleming, Research Associate

Sources and Additional Resources

CGAP: Building Inclusive Payment Ecosystems in Tanzania and Ghana
http://www.cgap.org/sites/default/files/Focus-Note-Building-Inclusive-Payment-Ecosystems-June-2018.pdf

CGAP homepage
http://www.cgap.org

Airtel homepage
https://www.airtel.in

M-Pesa (Tanzania) homepage
https://vodacom.co.tz/en/getting_started_mpesa

Millicom homepage
https://www.millicom.com/

MTN Group homepage
https://www.mtn.com

Tigo Ghana homepage
https://www.tigo.com.gh

Vodacom homepage
http://www.vodacom.com

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