Vice-President, Dr Mahamudu Bawumia has expressed the need for countries across Africa to engage in financial inclusion to benefit from AfCFTA.

According to him, Central banks and financial sectors will continue to play an important role in developing “a well-functioning continental trading system” via financial inclusion.

Dr Bawumia further noted that a good financial service system is important to both the public and “central banks in particular”.

Speaking at the Ghana International Trade and Finance Conference, on the theme: Facilitating Trade and Trade-Finance in AfCFTA, the Vice President explained the significant role government has played in achieving that.

“At the heart of trading is the instrumental role of a robust and resilient financial system. A well-functioning financial sector provides the impetus for productive investment, expanded opportunities for jobs and wealth creation. As you may recall, in a bid to improve liquidity and strengthen the banking sector, the bank of Ghana implemented a new prudential regulatory framework. The banking sector clean-up was aimed at promoting financially stable banking sector.

“Indeed, one has to recognize that for the financial sector to play its role in the AfCFTA across Africa, there must be financial inclusion. Because if only a small fraction of your population has access to financial services and most of the traders don’t have, then the financial services will not be able to play any significant role. So, for African countries, it is very important that we emphasize, not only on the financial services, but financial inclusion. That is what will really catalyse the trade process that we are trying to do at the AfCFTA”.

Digitizing the Ghanaian economy

Additionally, Dr Bawumia indicated that Ghana was proactive by quickly latching on to digital trends with the advent of the pandemic.

According to him, helping to transition the adult majority via mobile money interoperability has helped to improve the number of people “with access to a bank account from about 30% to over 90%”.

“Concurrently, digitisation has also become one of the most consequential policies of the Nana Addo Dankwa Akufo-Addo government. When the scourge of the COVID-19 pandemic hit… it reinforced the need to pursue digitisation. These days, mobile banking is proving to be more convenient alternative to traditional banking channels. Several routine banking and money transactions are now executed through mobile phones and electronic payment systems.

“We recognized very early on that only about thirty percent of our adult population had access to bank accounts. The rest of the adult population had access to mobile money accounts and we took the decision that we needed to create interoperability between a bank account and a mobile wallet.

“That strategic decision which we took in 2018, has resulted in this mobile money interoperability being function in Ghana. We are the only country in Africa so far to have this type of mobile money interoperability”.

Implementation of Pan African payment and settlement system

Dr Bawumia stressed on the intra African trade’s ability to establish a single continental payment system. To this end, financial system operators will be able to carry out cross border payment.

He further expressed optimism that the roll out of the Pan African system will synchronise successfully with the payment system architecture developed by central banks across the continent.

That notwithstanding, the Vice President further revealed the inefficiencies inherent in allowing independent financial institutions to connect to the system.

“The easiest and quickest way for us to go as a continent is to have the national switches in Ghana, for example, under GhIPPS connects to the Pan African system, it brings along immediately all the 23 or so banks…

“With intra-African trade expected to improve from single digits to over sixty percent, the pan African payment and settlement system will allow businesses on the continent to clear and settle transactions in their local currencies without depending on third party currency.

“It will also provide an alternative to the current high cost and long corresponding banking relationships by facilitating trade and other economic activity across African countries through a simple, low cost and risk-controlled payment clearing and settlement system”.