Business News of Monday, 2 October 2017
A new report from ‘Better Than Cash Alliance’, an organization under the United Nations (UN) has shown that Ghanaian businesses prefer to pay in cash rather than make payments electronically.
The report, titled, ‘Building an Inclusive Digital Payments Ecosystem’, points out that the total value of payments made in 2016 was 561 billion cedis.
Out this figure, 37 percent was made through digital payments while the remaining 63 percent was made through cash.
The value of transactions made by individuals was 71 percent cash and 29 percent electronic, while most businesses made 65 percent payments in cash and 35 percent payments electronically.
By this, the report shows that most businesses in Ghana still prefer payments in cash.
The situation was however different at the government level as government leads in electronic payments with percent 86 percent and 14 percent in cash payments.
The Managing Director of Better Than Cash Alliance, Dr. Ruth Goodwin-Groen explains that the progress in government payments could be replicated in the private sector.
“The most important message in the report is that the government of Ghana has made incredible progress in digitizing payments as is shown in the 86 percent in the value of all payments,” he said.
Despite the progress, the report points out that a vast majority of payments by volume are still being made in cash.
The report estimates that 98 percent of payments in volume are still currently being made in cash, as individuals continue to purchase essential goods using cash.
The strong preference for cash in Ghana is as a result of the high cost of digital payments that are passed on to users.
Reacting to the issue, a Deputy Finance Minister, Charles Adu- Boahen assured that government is working with relevant stakeholders to reduce the cost of electronic payments.
“I think for us as a government the most important thing is to reduce the cost so that financial inclusion could be enhanced in the rural areas. This will help in savings and improve electronic payments,” he observed.
The report concluded that the centralized National ID system is crucial for expanding financial inclusion in the informal sector.