eCedi will not harm Mobile Money – BoG Source

    Dr. Ernest Addison, Governor of Bank of Ghana

    A highly reliable source at the Bank of Ghana (BoG) has told Techgh24 that its Central Bank Digital Currency (CBDC) – eCedi will not harm mobile money in anyway.

    His comment comes in the wake of concerns raised by players in the electronic money issuing space about possible attempts by the central bank to reduce the influence of mobile money and boost that of banks through the eCedi.

    The source described the concerns as “unfortunate”, saying that the underlying principle for rolling out the eCedi is to ensure that no stakeholder is short-changed so it is “quite strange” that any industry player would suggest that eCedi has been designed to hurt mobile money.

    “Our whole model is a do no harm strategy, add value or steer clear,” the BoG source said, adding that “Vodafone Cash is in the pilot,” which is testimony that BoG intends to carry the entire ecosystem along.

    The concerns raised by some EMIs was on the basis of portions of the recent eCedi Design Paper released by the central bank, particularly two statements under Chapters 5 and 7 of the paper. 

    Under Chapter 5, BoG made statements like “mitigate potential risks for the banking system disintermediation”, and in Chapter 7, it also said “The architecture model for the eCedi proposed by the BoG was developed with the aim of preserving the existing financial service landscape in view of the critical role of banks”.

    The concerned EMIs fear that those two statements meant eCedi is designed to restore the dwindling influence of banks in the financial transaction intermediation, which is currently dominated by mobile money and the EMI players as a whole.

    They also raised concerns about the lack of engagement with the industry players on the implementation of the eCedi.

    But the BoG source explained that disintermediation of banks has to do with the choice between central bank holding the cash in accounts that they open for customers at the commercial banks for banks and fintechs to provide apps etc. for consumers to spend the money directly from the central bank or the token/value based model where the funds sit in accounts with the commercial banks.

    “We chose the second model – that is what we meant by mitigating the disintermediation of banks. That way, the banks have deposits with which they can lend. It is never about reducing the influence of EMIs/mobile money,” he said.

    “I didn’t expect any lindustry expert on the banking or fintech side to say this because we are actually hoping that this can help solve many of the mobile money players’ liquidity management problems and enhance their profitability significantly,” he stated.

    On the issue of lack of engagement, the source said the the plan was to first issue the design paper for people to read before engagements begin.

    He also hinted that there is a whole media and education plan to be executed following the release of the Design Paper.

    Meanwhile, contrary to the fears of the industry players, the Design Paper lists specific benefits of eCedi to Fintech companies and even their agents.

    Find the list of benefits below:

    Mobile money operators and non-bank financial institutions such as microfinance institutions, rural and community banks, savings and loan companies, finance houses, finance and leasing companies, remittance companies, and credit unions play important roles in Ghana’s financial sector. The combined use of their services has been higher
    among the typically excluded population and have contributed the most to financial inclusion.

    The eCedi ecosystem can further boost financial inclusion by potentially curing existing pain points; specifically, liquidity challenges with deferred net settlement of mobile money interoperability transactions.

    It is also expected to open new opportunities for FinTechs as follows:
    • provide wallets, applications, and other services to consumers for the eCedi;
    • build upon the existing infrastructure and without having to rely on the fee-paying
    infrastructure of big private players;
    • develop products and services for merchants to accept and utilize the eCedi;
    • provide innovative services such as programmable money and machine-to-machine
    based payments to further the digitisation of financial services and commerce.

    Currently, intermediaries in the payment market charge merchants a percentage of the transaction value. Similarly, merchants pay for cash handling services. These two charges which have been the bane of growing merchant acceptance of digital payments can be reduced with the eCedi on the following grounds:

    • eCedi as an additional instrument for retail payments brings competition to the Ghanaian
    payment ecosystem thus leading to lower merchant fees;
    • The simplification of the payment chain has the potential of reducing the cost of payments.


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