Digitizing Group Savings in Rural and Peri-Urban Ghana

Digitizing Group Savings in Rural and Peri-Urban Ghana

Since CGAP called Ghana the ‘most DFS – ready country in Africa’, in 2015 the value of Mobile Money transactions in Ghana has continued to grow exponentially, writes Saqib Nazire, CEO of Interpay. It rose to from $18 billion in 2016 to $34 billion in 2017 (Bank of Ghana Payment Statistics Report 2018). Although Mobile Money is being rapidly adopted, it is still under-utilised because it is mostly used for person to person (P2P transfers).

With Ghana’s growing population, increasing urbanization rate, and high mobile phone penetration (91% according to CGAP in 2015), Interpay seized the opportunity to enable Business to Consumer and Consumer to Business (B2C and C2B) transactions using Mobile Money.

Interpay has always been keenly aware of the potential for digital financial services to drive financial inclusion in Ghana. Therefore, the MasterCard Foundation-funded Savings at the Frontier (SatF) program’s 2016 Call for Concept Notes was an opportunity to re-purpose Interpay’s product offerings to give rural and peri-urban Ghana access to formal financial services using Mobile Money.

SatF leverages on savings groups and other informal savings mechanisms as a channel for the delivery of digital financial services such as savings, credit, and insurance. A savings group is a social organisation of 15 to 25 members (who live together, work together, or have common savings goals) who make regular contributions towards a group fund for individual or group needs. Savings groups are key as they are woven into the fabric of Ghanaian society, especially in rural and peri-urban areas.

Each savings group has its own format and structure, with some groups distributing loans to members. For savings groups that save with a formal financial institution – usually a rural/commercial bank or Microfinance institution – the process by which the financial institution receives the funds is manual and does not give the financial institution a detailed picture of group member transactions as groups record transactions manually and rely on a Cash Collection Agent from the financial institution to pick up the cash and deposit it at the financial institution. This process is inherently risky because of theft, embezzlement and collusion.

With $1M worth of grant support from SatF, Interpay is digitizing the savings mechanisms of savings groups in Ghana via Interpay’s USSD-based Maximus App. Maximus’ features include:

– A group wallet linked to the bank account of the group to enable management of all transactions from the various Mobile Money wallets;
– Full access to transaction history by all parties;
– Automation of recurring payments;
– Group-level account management and in-field account opening capabilities;
– SMS notifications on account activity (such as notifications of cash movement from the account);
– Voice notifications in local languages.

The social dynamics of a group that uses Maximus will remain the same – groups will still meet weekly and save. However instead of recording loans deposits by hand and waiting for an agent from the financial institution to pick up the cash, group members can contribute electronically from individual Mobile Money wallets.

With Maximus, financial institutions can increase their outreach and decrease their service delivery costs in the long term. With the group’s capability to transact electronically via Mobile Money, financial institutions can expand their customer base and also discontinue the use of Cash Collection Agents. Cash Collection Agents can also be re-assigned to be Relationship Managers who train groups on financial literacy.

Interpay aims to work with three partner banks in 2018 and two additional banks in 2019 by providing the technology needed to migrate existing savings groups and individual susu contributors onto the Maximus platform. We estimate that at least 40,000 underserved savings group members will benefit from these initial partnerships. If successful, we will extend the service to more financial institutions, potentially leading to benefits for hundreds of thousands of customers.

Savings at the Frontier (SatF) is a five and a half year programme (2015-2021) to improve the financial inclusion of low-income individuals and communities in sub-Saharan Africa and is a US$17.6million partnership between the Mastercard Foundation and Oxford Policy Management.

Interpay is a payment processor that connects merchants to Mobile Money operators, Visa and MasterCard, GHLink, and cash over the counter. Our interoperable platform enables cash-in through our network of over 144,000 active mobile money agents and 1,000 bank branches.

Interpay CEO Saqib Nazir is a speaker at Tech in Ghana Conference London 2018

Photo Caption: A member of the Interpay team (left) training MTN Mobile Money Agents in Bontrase, Central Region, on how to accept deposits from local savings groups.  Copyright – Interpay Limited, 2017.

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