The Institute of Statistical, Social and Economic Research (ISSER) has called for a dialogue between Mobile Money (MoMo) stakeholders to address the current impasse and arrive at fair and sustainable compensation for MoMo agents.

ISSER emphasises the critical role of MoMo agents in driving financial inclusion in the country, and urges all parties to consider resorting to evidence-based dialogue for a fair compensation model that will not jeopardise gains made in financial inclusion and the transition to a cash-lite economy.

According to ISSER, potential impacts of the unilateral decision taken could be extensive for customers – especially the underserved and last mile communities in the country.

This advice comes on the back of MoMo agents’ decision to restrict withdrawals to a maximum GH¢1,000 per transaction for a month – with the possibility of further action if no favourable adjustment is made to their compensation by the Telcos.

This decision was made through a press statement – titled ‘Fair Compensation to Mobile Money Agents’ on November 30, 2023 – by the Mobile Money Agents Association of Ghana.

ISSER, in a position paper by the Retail Finance Distribution Network (ReFinD), has indicated that MoMo agents are among the most important drivers of financial inclusion in Ghana; and their action has a potential to derail the gains made so far, hence there is a need for dialogue to address their concerns.

ISSER is of the view that Mobile Money (MoMo) has become the lead driver of financial inclusion in Ghana – accounting for about two-thirds of Ghana’s remarkable achievement of a 95% financial inclusion rate, according to the Ghana Financial Sector 2021 Demand Side Survey.

It further noted that Mobile Money agents have remained the wheels for extending MoMo’s reach across the country, which indicates that MoMo agents represent the closest formal financial service provider to consumers across the country – with 92% and 76% of adults reaching a MoMo agent in less than 30 minutes in the urban and rural areas respectively.

With the current compensation structure, a flat fee of GH₵10 is deducted from transactions of GH₵1000 and above. The GH₵10 is then shared between the agent (40 percent) and MoMo provider (60 percent). Thus, a transaction of GH₵5,000 will earn the MoMo agent a commission of GH₵4 under the old model. With this new action by the agents, a withdrawal of GH₵5,000 will earn them GH₵20 – since the customer has to make 5 withdrawals of GH₵1,000 each to receive the desired GH₵5,000. However, this will cost the customer GH₵50 – an increase of GH₵40 from the old rates.

ISSER believes there is a need for regulatory guidance on market dominance and competition in the agent network industry. It is again calling for an evidence-based dialogue on improving incentives for MoMo agents.

Call for regulator intervention

The statement added: “We acknowledge that the regulator does not have a role to play in the negotiation of business between MoMo providers and their agents. However, given the scale and extensive potential of the agents’ operations on the livelihoods and welfare of consumers, ISSER calls on the regulator to intervene as a referee to bring the two parties to the negotiating table”.

ISSER is therefore calling on all parties involved in negotiations to base their decisions on evidence, with the goal of ensuring fairness and equity in compensation and value-sharing between MoMo providers and their agents.

The negotiated outcomes should prioritise the sustainability of agents’ businesses while also maintaining the progress achieved in financial inclusion. Factors such as the operational costs for agents, pricing mechanisms of providers and agents, as well as the profitability and security of agents should be taken into account.

Additionally, stakeholders are encouraged to consider compensation structures in similar markets of Africa and Asia as reference points. The Institute is however ready to provide support as a research partner through its ReFinD.