Fintech driving the growth of e-commerce in Ghana

Mother : ‘’My son, how are you? I haven’t received my monthly upkeep money, papa is very sick and your little sisters have been home for a week because they were sacked for school fees. Please send some money urgently’’

Son : ‘’Hello Mama, I have been very busy these days and I haven’t found anyone coming to the village yet to send some money to you. I will send money as soon as I get someone coming to the village. Otherwise , I will come myself when the month ends’’.

These and many more were the kind of conversations between many families. Often, the inability to send money conveniently and on time resulted in many troubles, family drama and even unfortunate events. A few decades later, came the birth of financial technology popularly known as ‘’fintech’’. Digital payments have paved the way for a lot of progress and development in Ghana. The Ghanaian fintech market has experienced significant growth over the past year. Mobile money services are the dominant fintech business in Ghana. A survey conducted by the Bank of Ghana revealed that there were 14.7 million mobile money accounts as of May 2020.

Research from The FinTech Times also estimates that there are around at least 70 fintech solutions in the country with many fintech startups springing up every second. Jumia, Africa’s leading ecommerce ecosystem looks at ways in which fintech is driving the growth of ecommerce in Ghana.

1. For ecommerce to grow, both buyers and sellers have to work in harmony. SMEs and small vendors usually find it difficult to access loans and financial support from big banks. The processes and bureaucracies involved in getting some bank loans approved can sometimes frustrate businesses. Fintech companies have changed the status quo to the extent of even customizing loans for SMEs based on the specific categories, products or services they offer. On the other hand, customers also should find it easy to pay for the goods and services they order online. With the expansion of mobile money services, it has become increasingly easier for these payments to be completed and on time. This has led to a steady increase in financial inclusion, brought sellers and consumers together and built a strong foundation for the growth of eCommerce in Ghana.

2. The global ecommerce space has been transformed drastically by fintech. Today, one can be in Accra and buy items from China or Europe and be able to pay for them easily and conveniently. With massive improvements in logistics, one of the biggest hindrances to ecommerce growth was payments across cities, countries and continents. Digital payment platforms such as JumiaPay, Google Pay and PayPal have revolutionized payment processes and have now made it possible to perform several financial transactions from the comfort of our homes and offices. When online orders fail to be completed as well, refunds were difficult to complete and took longer. With Fintech, that problem has been resolved and refunds are now faster and more reliable.

3. Only a few years ago, consumers were so uncomfortable sending money online or making payments online. Imagine trying to explain to your grandparents in the village that money can exchange hands without physically being seen. Fintech companies have helped build trust among consumers by providing them easy payment interfaces. With mobile apps and easy to use platforms, consumers now send and receive money or make online payments with just a few clicks. Consumers and sellers now do not have to drive through traffic and join long queues at banks anymore to get their payments done.

4. Technological improvements and innovation among fintech companies comes along with great competition and this is beneficial to consumers, sellers and ecommerce platforms. Digital payment platforms have improved the efficiency of their services, the easy use of their interfaces and the overall convenience.  Ecommerce in general has been greatly boosted over time by this. Consumers are now spending more money and time online with an increase in value added services from fintech companies. Many fintech companies now offer cashbacks, huge discounts and even freebies such as movie tickets, vacations, free airline tickets etc. This has made digital payments attractive to use which in turn is driving the growth of ecommerce.

Over the course of the covid-19 pandemic where lockdowns were severe and movements were restricted, fintech helped many Ghanaians live safely by giving them platforms to pay their electricity and water bills, renew DSTV and GoTV subscriptions as well as purchase gaming vouchers. The ease, convenience and time saving has helped many Ghanaians and is driving the growth of ecommerce as well.

Source: Bennet Otoo, (PR & Communications Manager, Jumia Ghana)