Nadine Barrett-Maitland | Adopt Ghana’s model to improve Jamaica’s digital dollar

In Ghana, digital currency has demonstrated the power of technological solutions. Their successful implementation of mobile money shows how technology can help modernise the financial system. Jamaica can investigate how Ghana became the fastest mobile money market in Africa. Their digital dollar usage demonstrates how technology can be a catalyst for financial inclusion, resulting in a modern financial sector.

Telecommunication is at the core of Ghana’s framework. The framework allows users to use any mobile phone even if it is not a smartphone. Anyone with a mobile phone can use mobile money. This framework seems less cumbersome, is very user friendly, and one worth investigating. In January 2021, almost 39 per cent of people over 15 years old had a mobile money account. This represented a 24 per cent growth over the previous year.

According to a World Bank report, mobile phone penetration levels in Jamaica reached 103 per cent as a percentage of the population in 2021. Statista reports that mobile devices account for 55.27 per cent of the traffic on the web. These statistics are very encouraging since adopting the Ghanian framework requires high mobile penetration levels. This is the first positive indicator for solving the puzzle.

HOW THE GHANIAN MODEL WORKS?

The Ghanian model utilises the know-your-customer (KYC) requirements. Customers simply need to have a government-issued identification card to own mobile money wallet. Agents travel to rural communities to register persons for a mobile money wallet. They use driver’s licences, voter’s ID cards, and National Health Insurance Scheme (NHIS) cards to complete registration. In rural areas, the most common forms of identification are voter’s ID and NHIS cards.

Customers can take cash to approved agents and convert it into mobile money, which is deposited into their mobile money accounts called “cash in”. The digital/mobile money can be sent to another person’s wallet, and that individual can then visit an approved agent, who can convert the digital funds back to cash (“cash out”). Additionally, a specific programme was created for informal vendors, mainly women, which allowed them to transact business using mobile money. This proved to be a much safer way to do business as it reduced robberies. Deposits from customers can be transferred to savings through partner banks and the rest to mobile wallets. Individuals may also buy insurance and make pension contributions on the platform.

APPLICATION IN JAMAICA

Like Ghana, Jamaica’s mobile penetration level surpasses its population figures. As at 2022, Jamaica’s population was 2,818,596. Groupe Speciale Mobile Association reports that at the start of 2022, there were 3.09 cellular phone connections in Jamaica. This means that there is an increase in the mobile connectivity per capita. Based on these numbers, there is 1.1 mobile connection per person. While there may be instances where one person owns more that one mobile device, we can safely say that the mobile penetration level in Jamaica is very high. This makes Jamaica an excellent candidate for the adoption of the Ghanian model.

Medium, small and micro enterprises (MSMEs) account for 70 per cent of employment and are the “engine” of Jamaica’s growth. Yet, over 60 per cent of MSMEs remain informal and can be categorised as unbanked or underbanked. Additionally, a World Bank report states 42.99 per cent of the Jamaican population resides in rural parishes. Many rural communities are underserved and people sometimes travel several miles to get to a bank or an automated teller machine. Many of these persons who sell groceries and are often victims of robberies. The wallet could reduce these challenges and help protect its users. Many people in rural areas only have a voter’s ID, driver’s licence, and /or a NHF card. In Jamaica, we could include the tax registration card as a valid card since it has detailed information about the cardholder. This would facilitate an easier and a more seamless transition for the use of the mobile money. We would see increased financial inclusion as a result.

BENEFITS

Some of the benefits of secure implementation of the digital dollar are:

1. Easier transfer of funds especially for the unbanked or underbanked. Transferring funds from one mobile wallet to another is seamless and effortless.

2. Physical security. There is no need to walk around with large amounts of cash. Creating and protecting a PIN will provide the necessary physical security.

3. Convenience and portability. Anyone may use a mobile phone to conduct transactions anywhere, at any time.

Some of the challenges are related to cybersecurity issues of confidentiality and authenticity. Confidentiality focuses on how to protect sensitive information such as PINs, passwords, and other information used during a transaction. Authentication relates to ensuring that the persons initiating the transactions are who they claim they are. Implementation of the system in a secure manner can mitigate against these challenges.

Mobile money has the potential to revolutionise the way we do business and to improve ecommerce resulting in growth in GDP. Adopting the Ghanian model can assist in financial growth. The present implementations of the digital currencies and the telecommunication penetration level are positive factors to be considered. However, the service currently offered by our telecommunications service providers cannot take us there. As the old saying goes, “the journey of a thousand miles begins with one step”. The stakeholders can see how Ghanian model can be adopted in Jamaica.

Nadine Barrett-Maitland, PhD, is a senior lecturer at the School of Computing and Information Technology, University of Technology, Jamaica. Send feedback to columns@gleanerjm.com.