From Ghana to Luxembourg; a fresh perspective on electronic money

Barbara Love Vondee testimonial part 1

I am Barbara Love Vondee born in Accra, Ghana and currently living in Luxembourg to complete my masters in Entrepreneurship and Innovation.  During the course of the summer, I am undertaking an internship with Koosmik, who are currently developing electronic money solutions aimed at the unbanked populations of West Africa.


Being born and raised in Ghana since childhood, I am looking forward to providing you with my testimony regarding parallels and differences between Luxembourg and Africa. In this first part, I will discuss the advent of the digital economy; particularly regarding mobile payments and the cultural differences in West Africa (focusing more on Ghana), in contrast with Europe (Luxembourg as a reference point). The rapid spread of mobile phone penetration across Africa provides a solid starting point. According to a research by McKinsey and Company, in 2014, nearly 80 percent of adults in emerging economies have mobile phones, while only 55 percent have bank accounts. This means that many people and small businesses in the sub region do not fully participate in the formal financial system. Instead, they store and transfer money through informal networks despite their high transaction costs and the risks of theft.


More than half of the adult population in West Africa lack one of the most basic amenities of modern life: a bank account.


Taking a look at the two continents, Europe and Africa, it is fascinating how mobile money is perceived differently. In developed countries, it remains underestimated while for Africans, it is almost essential and the backbone of our financial inclusion. There can be a simple explanation for this phenomenon especially considering the cultural aspect of how people interact financially. An estimated 80 per cent of the eligible population of Ghana is said to be either unbanked or underbanked, while cash remains the main means of financial transaction. This is due to the fact that most banks are largely geared towards serving the wealthier classes or larger companies. Their products are rarely tailored effectively to lower-income individuals. In contrast, the payment card, now also contactless and online shopping dominates most parts of Europe given that its population is largely banked if not even overbanked; the differing perceptions of digital technological advancement could be considered a factor. For instance, in Europe, children under the age of 18 have access to high-end smartphones while smartphone usage in Africa is mostly centred around the youth between the age of 18-25, and amongst the growing middle class.

The global payment space remains one of the most active technology markets in terms of disruption, interest, and investment. In terms of innovation, Africa is widely acknowledged as a leading region with regards to the banking industry. The advent of M-Pesa, launched in 2007, is still extensively cited as a prime example of business innovation which indeed catapulted mobile money into the banking landscape, and today the range of mobile operators offering mobile payments along with many other mobile financial services is proliferating.

If there is one thing the West African consumer desires in our modern times, it is a new and more convenient way to pay for goods and services. In the past decade, mobile money has bridged this gap by offering mobile payments, simple person-to-person transfers and more complex transactional services. Currently, this is naturally evolving towards the advent of mobile banking. There is a flurry of new applications allowing users to open and hold an account, withdraw and deposit cash, make and receive payments, and even apply for additional banking services such as loans, savings accounts or insurance; all from their smartphone. This evolution is spearheaded by Fintechs who are rapidly developing such apps independently from traditional banks, allowing users to open a “digital Mobile wallet” and adapting the solution to the local “money” culture. Vinod Sharma has an interesting take on mobile payments on his blog where he portrays the mobile wallet as nothing more than an account that is primarily accessed using a mobile phone.


Network operators target high-income, urban customers 


The sub-regional problem I observed while growing up was that smartphone ownership was rare among poorer segments of the population and rural areas. Factors such as network coverage and access to electricity also heavily impeded smartphone penetration. Four years ago, when I was at the University of Ghana undertaking my undergraduate studies in Political sciences, it was obvious that the network operators competed for younger, higher-income, urban customers and they paid special attention to the university communities.  This left the older generations, low-income individuals and rural inhabitants underserved. The latter tended to share phones between family members or friends, which provided considerably less control and privacy. This was, therefore, not an ideal situation for managing one’s finances in the past, leaving them either unserved or underserved in terms of their financing needs.

In current times, there has been an impressive growth in smartphone access coupled with a positive growth of the middle class. There is a contrasting situation in Luxembourg because the use smartphones and other advanced technologies are not restricted to just the teens or the middle class. Children too, are exposed to the different phases of the digital technological curve and they mature with it.


A brighter future; Mobile banking as a driver of economies


I think that that the convenience of mobile banking coupled with a growing mobile penetration is allowing a widespread access to financial services across Africa. It has the potential to be the key driver for our next economic growth. I am very confident about the future of this sector because there is a notable change in consumer behaviour, a tangible development and introduction of new technologies and banking innovations bridging the gap between outdated banking and future expectations of the financial industry.

I will give you a practical example. Susu is what we call in Ghana, one of the most widespread informal savings practices in Africa. There are many different names for it including tontine, tanda, tonton, Sou Sou, Chama, solidarity lending, money pool among others. All these terms refer to the traditional informal way of saving money, which is predominantly run and headed by women. It is a risky undertaking to be in charge of the tontine, since large amounts of cash have to be collected on a regular basis, stashed in a safe place, and then delivered to the next person in line to receive the pool. In Europe, tontines were a sort of 17th-century life insurance, but too many schemers and swindlers gave them a bad name, and they were eventually banned. It is in view of these demerits of the traditional system that some Fintechs have decided to digitalise the tontine, operating it entirely online.

However, in recent times we have seen a return to the use of community pots, even in Europe. These demerits of the traditional system have led some Fintechs to digitalise the tontine, operating it entirely online.

Widespread smartphone ownership can further encourage adoption of digital finance. Fintechs are already actively promoting mobile banking apps for smartphones as the number of smartphones is increasing steadily. Thanks to low-cost android phones on the market. As discussed in a previous article “Africa in the mobile era” over 70% of Africans will own a smartphone in 2020 compared to under 25% in 2015.   Mobile banking is receiving a massive boost in Ghana and West Africa largely due to the fight against illiteracy. Also, lately, service providers have implemented better security measures to reduce the threat of theft and online fraud.


Fintechs are extending banking penetration and addressing untapped markets including unbanked and low-income markets as well as overcoming infrastructure limitations and inefficiencies.


Mobile banking in West Africa has steadily advanced from pull-based short message services (SMS) banking in the early 1990s to high-end mobile applications downloaded onto customers’ mobile devices, such as smartphones and tablets. Fintechs are extending banking penetration and addressing untapped markets including unbanked and low-income markets as well as overcoming infrastructure limitations and inefficiencies.

Mobile banking also offers customers the benefit of accessing financial services quickly, easily, conveniently and more cost effective compared to traditional branch banking. In emerging economies such as Ghana, mobile banking is said to be one of the fastest growing markets. This may be attributed to the unprecedented growth in mobile penetration, the ever-growing usage of the internet on smartphones and the fast-growing middle class.

Ghana among other West African countries has welcomed the mobile payment systems. This is with the aim to promote financial inclusion for all, especially the unbanked population. In the sub region, the largest age demographic in smartphone use is the 18-34 group, since this group is seen as the driving force of banking innovation and expansion of product penetration. Also, cross-border remittances and trade are steering the direction of mobile payment services. A few key takeaways for Fintechs who are planning to bring financial inclusion to the West African sub region should consider that

  • The digitalisation of the financial sector must appeal to consumers by adding value and adapting their offer to meet the needs of their indigenous environment.
  • People must be incentivised to adopt digital financial services.
  • The Fintech industry needs to provide easy-to-use products that are significantly more attractive and adapted than current traditional offers.
  • The products must be easily understood and reflect the existing consumer behaviour.
  • The product also needs to be offered at a fair price allowing consumers to reap the long-term benefits.



In conclusion, I believe that in order for our active middle class to continue to grow and thrive, we need to continue to increase the financial inclusion in our local societies.

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Barbara Vondee

Barbara Vondee

Barbara is a student from Ghana currently completing a Masters in Entrepreneurship and Innovation at the University of Luxembourg. Barbara is already a young entrepreneur, having started her own jewellery making business Vondeebeeworld at the age of 17.

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