The Bank of Ghana (BoG) has reaffirmed its commitment to fostering innovation through a regulatory framework that promotes growth while protecting consumers. The central bank stresses that regulation should enable innovation rather than hinder it, ensuring a safe and stable financial system.
This stance was articulated by Hayford Kumah, Head of the DEMI & PSP Office at the FinTech & Innovation Department of the Bank of Ghana. Speaking at the Ecobank–JoyNews Business Financial Dialogue on Tuesday, July 28, Mr. Kumah highlighted the central bank's deliberate pursuit of a balanced and proportionate regulatory approach. This strategy aims to encourage new financial technologies while maintaining the overall safety and stability of Ghana's financial sector.
Ghana has made significant strides in expanding access to financial services, with a financial inclusion rate estimated at 96 percent by the Ministry of Finance. The World Bank estimates this rate at approximately 81.4 percent, reflecting differences in measurement methodologies. Despite high access, the current challenge lies in increasing the meaningful use of these services, moving beyond simple cash deposits and withdrawals to more sophisticated financial products like insurance, savings, and pensions.
Mr. Kumah emphasized that innovation and regulation should complement each other, not exist in tension. He stated, “Our regulatory framework is based on what we call a balanced and proportionate risk framework.” He added, “We are trying to bring on board as much innovation as possible but also ensuring that this is safe and sound.” This approach is crucial for safeguarding informal sector workers and less educated individuals who rely on digital financial services.
The central bank recognizes that many mobile money users currently limit their transactions to basic functions. Encouraging the flow of funds within the digital ecosystem for services like insurance and pensions will deepen financial inclusion. This will also improve financial resilience, particularly for those in the informal sector who often lack access to traditional banking services.
Concerns over fraud have discouraged some individuals from fully embracing mobile money and other digital financial services. Mr. Kumah acknowledged these issues, underscoring the need for stronger consumer protection measures and enhanced financial literacy initiatives. He stated, “We need to plug these gaps, and that has been the work we’ve been focusing on at the central bank.” Addressing these concerns is vital for building trust and encouraging broader adoption of digital financial tools.
The BoG's focus on a balanced regulatory framework aligns with Ghana's broader economic goals of digital transformation and financial sector development. By ensuring that innovation is both encouraged and secure, the central bank aims to unlock the full potential of digital finance. This will benefit a wider segment of the population and contribute to overall economic growth and stability. The ongoing efforts to enhance consumer protection and financial education will be critical in achieving these objectives.