KEY NOTE ADDRESS DELIVERED BY H.E. DR. MAHAMUDU BAWUMIA, VICE PRESIDENT OF THE REPUBLIC OF GHANA AT THE 10TH ANNIVERSARY CELEBRATIONS OF GhIPSS ON MAY 31, 2017 AT MOVENPICK HOTEL
The Deputy Governor and management of the Bank of Ghana,
Deputy Minister of Finance,
Board and management of GhIPSS,
MDs and CEOs here present,
Ladies and gentlemen,
It is with honour and nostalgia that I stand here today to deliver this key-note address to mark the 10th anniversary of Ghana Interbank Payment and Settlement Systems Ltd (GhIPSS).
It is nostalgic because I witnessed the early beginnings of GhIPSS and to see how it has evolved into the institution that it is today. It is really a very humbling experience.
This is not one which I can “say you and I were not there” because all of us were there 10 years ago as we witnessed the birth of this institution.
Let me also join others to congratulate all those who worked tirelessly to ensure the formation of GhIPSS and of course those who continue to support it as it carries out its mandate.
I will like to single out for special mention, the former governor Dr. Paul Acquah, who is a consummate visionary and technocrat.
He had this vision about how the payment system would evolved, of course I as a deputy governor can only do what my governor allows me to do and he gave me some latitude to carry out his vision, but it is primarily Dr. Acquah’s vision. There were others who made this possible; Fred France, Korsah , Joseph Tetteh and Narh.
We had a vision to really move Ghana from cash base society towards an electronic payment base society. I remember sometime in 2006, sitting in a restaurant in Accra and some clients on the next table when it came to time for payment and these were not Ghanaians.
When the bill was brought, they started making fun of the currency because they had a lot of currency to pay , they said “I billion ,2 billion” and as I sat down, I listened and said something has to change and we went and discussed this issue in the context of our old payment system development and what to do but we realised that to move towards Electronic- payment, once we have stabilised the macro economy we needed to re-denominate the currency as well because how do you expect people to use ATMs when you cannot really function?.
The ATMs will not function properly because they have to be bringing out so much cash out of them for just very small amount of money that people were taking out, so we decided to re-denominate the currency which we did in 2007 and it was all part of these pieces of this jigsaw to move us toward more convenient payment system in the country. So it is really also about financial inclusion as we thought more and more about the economy and the management of the economy.
We understood that one of the biggest problems was interest rate and how to bring down interest rate.
It was a major challenge; a problem that many countries from the 18th century had basically solved which is making sure a lot of the population are banked was one that we were living with. Ghana and many other countries on the continent had a large chunk of the population unbanked, but when you have a large chunk of the population unbanked it means savings in the financial system are lower.
It means there is a lot savings outside the financial system, but interest rate fundamentally is just a demand and supply of savings. If your supply of savings is limited because a lot of the savings are outside the banking system, the price of those savings which is your interest rate will be higher.
So this was the simple analytics that said let us try to bring the payment system to a level where it will bring about financial inclusion, then you will be able to sustainably tackle the interest rate problem, and this is really the background to how do we bring more people in the financial system.
How do we get people who have never gone into a bank getting bank accounts and this was the background to the e-zwich financial system because we wanted it biometrically based. We wanted to make sure that to have financial inclusion you had to have a national switch. It has been very remarkable.
Institutions like GhIPSS play a critical role in the transformation of economies, bringing about efficiency in payment systems, which is a key facilitator of business. Ghana over the last 10 years through the efforts of GhIPSS has witnessed some transformation of the Ghanaian payment systems landscape in line with global trends.
Just to cite an example of what GhIPSS has accomplished as we heard earlier: 10 years ago, a cheque issued from the northern zone (Kumasi/ Sunyani/Tamale) took 7-10 days to clear . . . today that same cheque can be cleared in a few hours or maximum in a day. The impact of this singular act of change on commerce and business cannot be over-emphasized.
Ladies and Gentlemen, the theme of the anniversary, Celebrating 10 years of Promoting Electronic Payments in Ghana, encapsulates what GhIPSS has been doing over the past decade. Beginning with just one product – the e-zwich, the company now has at least 7 distinct payment options with several variations.
What is mind boggling when you think about the number of transaction that go through the GhIPSS system.
Processing just about 3.8 million Ghana cedis worth of transactions in its first year, GhIPSS has recorded a phenomenal growth in the value of transactions, rising to a whopping 47.3 billion Ghana cedis in the first quarter of this year alone.
This is a clear indication of the central role GhIPSS has been playing in the financial intermediation arena of our economy.
Despite this obvious transformation to our payment system, the rate of patronage and the impact on the unbanked is not what we would wish.
As Mr. Amoabeng has noted, and he is one of those who saw the vision quite earlier, the banks have been a bit slow in catching on to this financial inclusion agenda but they are coming along.
While South Africa has about 86 percent of its adult population with access to banking, we have just about 35 percent.
Our neighbour, Nigeria is recording a drop in the issuance of cheques while internet banking, mobile banking, and Point of Sale (POS) usage are on the rise, clearly showing that electronic payment is deepening in that country.
If we deepen the usage of these electronic payment channels, we as individuals will benefit from it, businesses will gain significantly and the economy as a whole will be richer for it. The success of GhIPSS therefore directly impacts on us as a people.
Happenings across our continent, suggest that we take the electronic payment agenda a notch higher in Ghana so we are not left behind.
Ghana has a robust payment infrastructure which places us at an enviable position to take the world by storm. What is required is a holistic and joint effort of all stakeholders, to shift behaviours towards electronic payment options.
Let me therefore urge the financial institutions to work closely with GhIPSS and to vigorously promote these channels of payments. Achieving a total migration of our payment behaviour in favour of electronic channels actually feeds into our mandate as a government.
His Excellency the President,Nana Addo Dankwa Akufo-Addo, has been categorical about his unwavering desire to see this country’s economy transform under his leadership and we are working day and night to ensure this happens to the benefit of our people of Ghana who have reposed their confidence in the government.
Ladies and Gentlemen, as part of the transformation agenda, we have set out to ensure the deepening of financial inclusion. And as the CEO of GhIPSS mentioned, I have asked them to work to ensure that our financial system is totally interoperable and I am glad to say that they are on course. I am looking forward to the realisation of this goal before the end of this year.
As you are aware, the government is also working to ensure that we have a proper National Identification System in place before the year ends.
If we achieve these, which I believe we can, our financial sector would witness a huge transformation that we have never witnessed.
I say so because, our financial services would have the most effective primary and unique identifier of each person and with the plethora of electronic payment delivery channels, coupled with the macroeconomic stability we are pursuing, one can envisage the massive flow of credit to the private sector that will occur. The resultant business expansion, job and wealth creation will follow naturally.
As we all know, we do not really have a properly functioning credit reference agency in the country, and one of the limitations is the fact that we cannot uniquely identify everyone. In addition to that, property addressing is very problematic.
Thankfully this year, we have decided that Ghana is going to migrate using technology to a digital address system. The technology is available; every place can be identified uniquely by a unique code.
We are going to take advantage of this technology and leapfrog other countries and establish digital addressing system this year. It will make a major difference because addresses will then allow business to happen and it will allow unique identification to be also complemented by unique address.
You cannot function without an address system in the advanced economies, so many businesses are based on the address system, and this is why it means so much to Ghana.
Ladies and Gentlemen, let me say unequivocally, that I fully support any effort to make our public sector efficient, effective and devoid of corruption. Indeed, it fits into government’s anti-corruption stance and I can promise you that the government will get the public sector institutions to make electronic payment, the default form of receiving taxes, levies and fees.
If we do not make it the default, then we cannot have that sort of usage in many places and we are moving to do that.
It is obvious, Ladies and Gentlemen, that government’s efforts to sanitise the country’s entry ports and reduce time spent clearing goods, will be greatly enhanced, if all payments are done electronically. We have already embarked on a project to go paperless at the ports.
This initiative at the ports should entice financial institutions and Fintech companies to work closely with GhIPSS in providing solutions that will support payments at the ports.
Ladies and Gentlemen, the ten years in the life of GhIPSS has been important and well utilised. But even more important is the ten years ahead of us. As government hurries with its economic transformation agenda, I would expect GhIPSS, the financial institutions and other stakeholders to also hurry along.
The next decade should see complete transformation of the country’s payment system that radically changes how payment is done from the mall to the market. Financial inclusion should be optimal and majority of us should be using electronic payment channels regularly.
After 60 years of independence, it cannot longer be business as usual. We all must roll our sleeves and work to transform our country.
We owe it a duty to bequeath to the younger generation, a Ghana that we can all be proud off, a Ghana that has enough jobs for its citizens, a Ghana that gives opportunities to its citizens, and a Ghana that is truly the shining star of Africa.
May God bless our efforts as we seek to make Ghana great again.
God bless our homeland Ghana
Thank you very much for your attention.