Africa’s financial landscape is undergoing a rapid modernization, but significant challenges remain. Slow settlement times, high fraud rates, and fragmented data hinder the potential of digital finance. Transfers often take hours or days instead of seconds, interoperability between banks and mobile money operators is inconsistent, and merchants are hesitant to embrace digital payments due to difficulties resolving disputes and chargebacks. Governments also face obstacles in efficiently and transparently disbursing payments to citizens and vendors. The solution lies not in a single application, but rather in a coordinated approach encompassing instant payments, clear fraud regulations, robust identity verification and e-KYC processes, secure data sharing frameworks, and a regulatory environment conducive to innovation. Developed markets have already navigated these challenges, offering valuable lessons and models for African countries to emulate and adapt.
The foundation of a modernized financial system rests upon the establishment of an instant payments infrastructure, enabling consumers and businesses to transfer funds instantaneously. This system should draw inspiration from successful models like the US FedNow and RTP networks, as well as Australia’s New Payments Platform (NPP), ensuring speed and accessibility for all stakeholders. Crucially, an African instant payments rail should prioritize three key features: rich ISO 20022 messaging to provide structured data for improved reconciliation, fraud prevention, and analytics; simple addressing using aliases tied to verified phone numbers or IDs to minimize errors; and a standardized request-to-pay functionality, enabling merchants to send payment requests that customers can authorize securely. These features enhance efficiency, transparency, and user experience within the payments ecosystem.
Combating fraud effectively requires proactive design rather than reactive blame. Two critical measures, successfully implemented in the UK, should be adopted: a “Confirmation of Payee” system, which verifies account name and number matches before a transfer is executed, preventing misdirected payments and impersonation scams, and a clear reimbursement code for victims of authorized push-payment fraud, incentivizing financial providers to invest in preventative measures and data sharing. By incorporating these measures, Ghana’s instant payments rail would establish a robust framework for fraud prevention and victim restitution, fostering a more secure environment for digital transactions. Furthermore, transparent fraud statistics and standardized telemetry from financial institutions will enable the identification of emerging fraud patterns and the implementation of targeted interventions.
Secure digital identity and streamlined electronic Know Your Customer (e-KYC) processes are essential for safeguarding payments within a modernized financial system. Singapore’s Singpass provides a compelling example of a national identity system that facilitates secure login, consent-based data sharing, and digital signatures, enabling efficient onboarding and verification by financial institutions. While replicating the app itself is not necessary, the underlying architecture – a trusted identity layer with APIs, verified attributes, and consent logs – offers valuable guidance. By linking Ghana’s national identity register to bank and mobile money onboarding through an e-KYC gateway, and implementing tiered KYC regimes for low-value accounts, financial inclusion can be maximized without compromising security. This integrated identity infrastructure can also be leveraged for government disbursements, tax refunds, and social protection programs.
Secure and efficient data sharing is critical for accelerating the speed and efficiency of financial transactions. The UK’s Open Banking initiative, which mandates data sharing through standardized APIs, and Australia’s Consumer Data Right, which extends this framework across multiple sectors, demonstrate the positive impact of data portability. These initiatives empower consumers and SMEs to share their financial data with accredited third parties, leading to improved product quality, increased competition, and more informed credit decisions. Ghana has the opportunity to leapfrog existing models by establishing an “Open Finance” framework from the outset, encompassing bank accounts, mobile wallets, savings groups, pensions, and utility payment histories. By implementing accreditation for data recipients and granular consent mechanisms, Ghana can ensure data security and user privacy while unlocking the potential of data-driven financial services.
Finally, a forward-thinking regulatory approach is crucial for fostering innovation and ensuring the responsible development of the financial sector. Regulatory sandboxes provide a safe space for innovators to test new products and services with real customers under the supervision of regulators. Ghana can establish a joint sandbox involving the central bank, competition authority, and data protection regulator, streamlining the testing process for both prudential and data-use compliance. This sandbox can be used to accelerate the development of public-interest initiatives such as interoperable QR codes, merchant acquiring for micro-SMEs, and cross-border settlement corridors, further driving the modernization of Ghana’s financial system.
The successful implementation of this modernized financial ecosystem requires a well-defined plan with clear performance indicators and risk mitigation strategies. A proposed 24-month execution plan outlines four key phases, starting with the establishment of an instant payments framework, fraud prevention mechanisms, and an e-KYC gateway. Subsequent phases focus on piloting and expanding the instant payments rail, implementing open finance, and integrating government payments. Key performance indicators, such as settlement times, fraud losses, and open finance adoption rates, should be publicly tracked and reported to build trust and transparency. Simultaneously, robust risk mitigation strategies must address potential challenges related to fraud, privacy concerns, vendor lock-in, and cross-border interoperability. By learning from international best practices and adapting them to the local context, Ghana can establish a robust and inclusive financial system that supports economic growth and empowers its citizens.
