The amount of money held in accounts, also known as balance on float – primarily in mobile money accounts, has remarkably increased, reflecting a continuous upward trajectory and transformation in the financial landscape.

Data from the Bank of Ghana reveal a nearly four-fold increase in just over three years, from January 2020 to June 2023. The balance on float, which stood at GH¢3.68billion in January 2020 soared to GH¢14.4billion as of half-year 2023 – underscoring the increasing reliance on electronic transactions and reflecting changing consumer behaviour and a shift toward a cash-lite society.

This surge in the balance on float not only indicates the growing adoption of electronic financial services but also holds significant implications for the economy and financial sector.

Further examination of the official data shows that the metric doubled in the year the pandemic broke out, with a December 2020 value of GH¢7billion. It continued growing steadily and crossed the GH¢10billion mark for the first time in October 2022.

The biggest nominal month-on-month growth occurred in December 2022 when an additional GH¢2.2billion was recorded over the previous month’s GH¢10.9billion, consistent with increased economic activity in the year’s final month. This was followed by GH¢1.6billion in June 2023.

The levy on electronic transactions, the E-levy, appears to have had a modest impact on the linear growth pattern. The month after its announcement – December 2021 – the balance on float grew from GH¢8.9billion to GH¢9.7billion. However, from April 2022 – after it came into law – there was a consistent decline from GH¢9.6billion to GH¢9.1billion in August. However, a rebound began in September when it recorded GH¢9.8billion.

The development mirrors growth in the wider mobile money ecosystem, which saw the value of transactions hit GH¢1.07trillion at the end of 2022. This remains on course to be beaten, as by the end of June 2023 the value of local mobile money transactions stood at GH¢859.5billion.

By comparison, the total transaction value of cheques cleared and Internet banking was GH¢146billion and GH¢39.1billion respectively.

Impact

Analysts have said that the surge in balance on float points to a more efficient and convenient way of conducting financial transactions. This growth is not just a numerical phenomenon; it represents a shift toward digitisation, transparency and financial inclusion.

Electronic money services offer greater accessibility to financial tools for individuals who may have been excluded from traditional banking systems. This democratisation of finance has far-reaching effects on the broader economy, they say.

One of the most notable impacts of the rising balance on float is a reduction of liquidity constraints. With more money being held electronically, individuals and businesses have increased flexibility in managing their finances. Faster and more secure transactions lead to improved cash flow management, enabling businesses to invest and expand with greater confidence. This in turn can spur economic growth by fostering entrepreneurship and job creation.

Furthermore, the increased use of electronic transactions can lead to a decrease in the cost of cash management on the back of a later introduction of an e-Cedi. The expenses associated with printing, transporting and securing physical currency can be reduced as more transactions shift to digital platforms. This cost reduction can free-up resources which can be channelled into productive areas of the economy.

The balance on float also plays a pivotal role in enhancing financial stability. Traditional banking systems often rely heavily on physical currency, which can be vulnerable to theft, counterfeiting and natural disasters. By promoting electronic transactions, the financial sector becomes more resilient to such risks, ensuring that the economy remains resilient even in challenging times.

The nation’s journey toward a thriving e-money economy has been supported by regulatory frameworks that encourage innovation while safeguarding the interests of consumers. The rise in balance on float is a testament to the success of these efforts. As the financial sector continues to evolve, maintaining a delicate balance between innovation and security will remain crucial to sustaining this growth.

However, it is important to acknowledge that while electronic money services bring immense opportunities, they also pose challenges which need to be addressed. Cybersecurity concerns, data privacy, and ensuring that digital financial services are accessible to all segments of the population are among the key considerations regulators and industry stakeholders must navigate.

As the balance on float continues to grow, it’s imperative for financial institutions, policymakers and technology providers to collaborate in ensuring a seamless and secure transition to a digital economy. Public awareness campaigns that highlight the benefits of electronic money services and educate consumers about safe online practices will play a crucial role in this journey, analysts have stressed.