Whose money? Digital remittances, mobile money and fintech in Ghana

ABSTRACT

This articles explores the intertwining of the digitalisation of remittances with the behavioural turn in development and, more specifically, the advancement of digital financial inclusion. It sheds light on the intricate ways in which state, civil society and private sector actors seek to leverage digital remittances as a way to expand financial inclusion. Drawing upon qualitative field research undertaken in Ghana, this paper traces the emergence and take up of digital financial services – including digital remittances – and argues that the advancement of digital financial inclusion runs the risk of increasing the capacity of commercial and financial institutions to curtail migrants’ and remittance recipients’ essential strategies of social reproduction. By providing a grounded account of the concerted efforts that must be made in order for the ‘behavioural turn’ in international development to materialise, this article contributes to the development of a geography of marketisation framework that is attuned to this behavioural shift. It also advances a burgeoning literature that critically unpacks the often-celebrated turn to fintech and digital financial inclusion in international development.

KEYWORDS:

• Digital remittances
• fintech
• mobile money

Introduction

As a response to the Covid-19 crisis and the challenges faced by migrants and the people they send remittances to, concerted efforts have been made by key international actors to ‘keep remittances flowing through the crisis’ (Ratha 2021). While global remittances were predicted to decline by 14% by 2021 compared to 2019 pre Covid-19 levels (World Bank 2020a), they proved much more resilient than expected, registering a small decline of 1,6 percent between 2019 and 2020 and expecting to increase by 2,6 percent in 2021 (World Bank 2021). In early 2020, the International Fund for Agricultural Development (IFAD) led the COVID-19 response via the establishment of the Remittance Community Task Force, coordinating actions of both public and private sector actors. Key among the call to policymakers, regulators and remittance service providers were the provision of remittances as an essential financial service, the implementation of welfare and economic support measures benefiting both migrants and remittance private sector actors as well as the scaling up of ‘digital’ remittances (KNOMAD 2019). Digital remittances are remittances sent ‘via a payment instrument in an online or self-assisted manner, and received into a transaction account’, including a bank account, a microfinance institution account or a mobile money account (World Bank 2020b, p. 5). Digital remittances are deemed not only more convenient but also faster and cheaper (IFAD 2020). Furthermore, and perhaps most importantly, by linking digital remittances to a broader ‘digital financial ecosystem’, this shift from cash to digital is expected to advance the financial inclusion development agenda, allowing migrants and recipients to increase their savings, maximise their investments and access digital credit (GSMA 2018, p. 3). This paper aims to offer a critical reflection on a wide range of policies and initiatives that attempt to digitalise remittances as a way to expand financial inclusion in Ghana. It also starts fleshing out some of the barriers and limitations that such initiatives face.

International remittances processed via mobile money amounted to US$12.7 billion in 2020, constituting a 310% and 61% increase since 2015 and 2019 respectively (GSMA 2021).¹ In early 2020, the pan-African bank Ecobank, with a presence in more than 33 African countries, announced a partnership with China-based Ant Group’s platform payment Alipay in order to ease cross-border payments in Africa (Donkin 2020). In September 2020, MoneyGram, the giant money transfer company signed a partnership with Airtel Africa that will enable the telecommunication and mobile money company’s 19 million customers to receive transfers directly into their mobile wallets (Finextra 2020). A couple months later, PayPal’s money transfer service Xoom launched its international remittance payments from senders in the UK, USA, Canada and Europe to mobile money wallets across 12 countries in Africa (Xoom 2020).

Despite these impressive upward trends and recent developments, mobile money-enabled international remittances only represent a small fraction of the estimated US$508 billion that were sent to people living in countries in the Global South in 2020 (IOM 2020). One of the reasons advanced in this paper is that the digitalisation of international remittances first requires a strong domestic mobile money take up in countries of origin. In turn, the rise of mobile money and ‘digital’ financial inclusion in the Global South is not a natural nor uncontested process but rather necessitates complex regulatory, technological and discursive constructions in order to re/engineer the financial behaviours and practices of both migrants and remittance recipients as well as agents that mediate these flows. This article sheds light on the intricate ways in which digital remittances, both domestic and international, constitute a ‘segment’ that private sector companies seek to leverage to drive financial inclusion. What’s more, the rationale behind the construction of digital remittances, and digital financial inclusion more broadly, is to broaden the choices migrants and recipients have and expand their ‘financial capabilities’ (IFAD and World Bank 2015, p. 27). In contrast, I show how efforts to adjust migrants’ and recipients’ ‘choice architecture’ – that is, a set of technologies that allow private sector and development professionals to ‘point people toward a particular choice by changing the default option, the description, the anchor, or the reference point’ (World Bank 2014, p. 36 in Klein 2017, p. 384) – runs the risk of increasing the capacity of commercial and financial institutions to curtail migrants’ and recipients’ essential livelihood strategies and coping practices. Far from a displacement of so-called ‘informal’ social relations of money and finance, the ‘informalisation’ of the relationship between financial institutions and remittance customers seems to increasingly constitute a strategy that aims to co-opt already-existing financial circuits, arrangements and practices (see also Rodima Taylor and Kedir and Kouame in this Special Issue).

The contributions of this paper are twofold. First, it provides a grounded account of the concerted efforts that must be made in order for the ‘behavioural turn’ in international development to materialise (Fine et al. 2016, Brooks 2021). It uses the case of mobile money in Ghana and extends the geographies of marketisation approach developed by Berndt and Boeckler (2012) to the realm of digital remittance markets.² In doing so, it accounts for the complex and fragile establishment, active commitment and maintenance of particular agencies that are distributed across a heterogeneous assemblage of human and nonhuman elements, ranging from narratives and regulations to algorithms, technical and material devices (Berndt and Boeckler 2009, 2012, see also Çalışkan and Callon 2009, 2010). More specifically, my analysis of the branchless banking model led by mobile network operators – or mobile money – contributes to the development of Kear’s (2018, p. 317) ‘behavioural geography of marketisation’ which accounts for the scattered ways in which economic subjects come to encounter the heterogenous elements that configure a market. By drawing upon such a framework, the paper offers a clear illustration of how behavioural nudging takes place concretely. Second, this paper advances a burgeoning literature that critically unpacks the often-celebrated turn to fintech and digital financial inclusion in international development (e.g. Gabor and Brooks 2017, Bateman et al. 2019, Bernards 2019). It does so from a slightly different vantage point by looking at how this agenda is deeply intertwined with the global remittance agenda and, more specifically, long-standing attempts to digitalise remittances. The multi-scalar approach employed in this article allows to further understand how such marketising efforts at the international level shape, and are shaped by, the diverse social reproduction strategies of migrants and remittance recipients (Rodima-Taylor and Grimes 2019).

This article is organised as follows. First, I locate the recent changes in the global remittance agenda within the broader behavioural turn in development. I draw from and extend the behavioural geography of marketisation analytical framework to explore the emergence of the ‘digital remittance-financial inclusion nexus’ in Ghana. Second, I introduce the research methods before exploring the recent emergence and on-going construction of digital remittances in Ghana. The case of the digital credit product Qwikloan is then employed to illustrate the specific ways in which remittances are used as a gateway for the advancement of digital financial inclusion. I subsequently argue that what is at stake with the development of such products and the nudges that underpin them is the increasing (automated) capacity for a constellation of actors to hamper the choices available to migrants and recipients. I conclude by highlighting the need for more critical empirical research on the impacts of digital financial products and services on the lives of their users.

Literature review

A burgeoning literature within economic and development geography and international political economy has started to critically explore the rise of behavioural economics in international development policy and practice, noting that it constitutes a shift of focus from the market to the market subject or, in other words, from market regulation to behavioural engineering (e.g. Berndt 2015, Fine et al. 2016, Berndt and Boeckler 2017, Klein 2017, Kvangraven 2020, Brooks 2021). Behind the mainstreaming of behaviourism is the idea that the market, although still considered the ‘ideal institutional arena’ for development, can no longer ‘be trusted to realise itself all on its own in light of the behavioural anomalies besetting the poor’ (Berndt and Boeckler 2017, p. 289). Over the past few years, and especially since the publication of the 2015 World Bank report ‘Mind, Society and Behaviour’, poverty has come to represent ‘not only a deficit in material resources but also a context in which decisions are made’, imposing a cognitive burden that makes it especially difficult for poor individuals to think deliberatively (World Bank 2014, p. 13 in Gabor and Brooks 2017, p. 431). According to proponents of this agenda, financial instability and exclusion constitute a behavioural problem as poor people are constrained by a cognitive tax that only allows them to make judgments and decisions that are rapid, automatic, intuitive or even unconscious (Cognitive System 1) rather than rule-based, rational and explicit (Cognitive System 2) (Berndt 2015). As a result, what poor people are assumed to need is a set of interventions and devices which will both enable them to alter their defective behaviours and equip them with the financial capabilities to make the right choices and become ‘responsible, efficient and effective subjects’ (Klein 2017, p. 490, Kvangraven 2020). Through the use of ‘choice architecture’ and ‘nudges’, processes of decision making are simplified, default options are transformed, and alternative choices are made easier to pick (Klein 2017).³ I argue that this behavioural turn in development characterises recent changes in the global remittance agenda and, more particularly, the digital remittance-financial inclusion nexus.

Calls to harness remittance for development have played a central role in the migration-development nexus for more than forty years (De Haas 2005, Gamlen 2014, Horst et al. 2014). The initial euphoria around remittances – and the policies seeking to directly change the ways remittances are used or sent – has given way to new strategies and policy interventions to expand the choices migrants and recipients have. As Kunz (2011, p. 57, emphasis mine) aptly remarks, it is now accepted that ‘the potential for remittances and migration for development can only be achieved under certain conditions’, these conditions being related to the consolidation and expansion of a more competitive and formalised market for remittance services that is attached to the broader financial inclusion agenda (Toxopeus and Lensink 2007, IFAD and World Bank 2015). Thus, remittances are increasingly considered a gateway to financial inclusion for migrants and the people they send money to (Yujuico 2009, Ardic et al. 2012). In a report commissioned by the IOM, Isaacs (2017, p. 116, emphasis mine) argues that one way to influence remittance recipients’ behaviours would be to ‘use the remittance payout locations as ‘education centres’ for financial services’. Furthermore, initiatives to include remittances in the assessment of creditworthiness of remittance recipients and migrants have recently come to the fore (World Bank 2014). The development of ‘remittance-linked’ and ‘remittance-backed’ financial products are considered to be crucial to leverage remittances for financial inclusion (Agunias and Newland 2012, p. 126).⁴ At the core of the remittance-financial inclusion nexus are attempts to alter the financial architecture and instruments with which remittances are sent, received, saved and invested.

However, the advancement of the remittance-financial inclusion nexus, and of financial inclusion more broadly, in emerging and developing economies has been much more timid and uneven in practice than is generally admitted or assumed from both critiques and proponents of the agenda (Bernards 2019). Bernards (2019b) even argues that formal borrowing among low-income populations decreased in a number of key countries such as China, India and South Africa. Partly as a response to this uneven and slow progress in the last decade, proponents of financial inclusion are now advocating for the ‘digitalisation’ of financial products and services (Mader 2016a, Jain and Gabor 2020) and the ‘the turn to “fintech”’ (Bernards 2019b, p. 318). Building upon the increasing use of mobile phones, the rise of digital infrastructures and platforms (e.g. mobile money), Big Data analytics as well as a wide range of new devices and techniques to assess poor people’s creditworthiness (e.g. algorithm-generated credit score), this shift towards digitalised financial inclusion is expected to dramatically expand financial providers’ customer base and increase their profit (Bernards 2019b). What’s more, with digital financial inclusion, the type of actors and services that are now included and deemed legitimate for helping the poor financially has broadened (Mader 2018). Microfinance institutions are not the sole players anymore as a new coalition of actors has emerged, including large banks, philanthropic foundations, financial and technology companies – or Fintechs –, credit card companies, mobile network operators and even social media companies. Now portrayed by organisations such as the World Bank as the only legitimate source of ‘pro-poor’ financial products and innovations, these private players provide not only lending but also savings, insurance and, importantly, all kinds of payment products and services (Mader 2016b, Gabor and Brooks 2017). Maurer (2015) refers to ‘poverty payment’ to characterise this shift partly away from credit and towards a widening array of financial and (digital) payment services.

An essential component of the broader digital financial inclusion agenda, this digitalisation of payments, and more specifically of remittances, is what this article focuses on. While the role of digital remittances as a crucial entry point to more financial products and services has long been recognised (Lauer and Lyman 2015), it has increasingly been promoted since the start of the Covid-19 pandemic (KNOMAD 2019). However, significant concerns remain about digital data mining and surveillance (Gabor and Brooks 2017, Datta 2019) as well as the exploitative and exclusionary nature of many digital financial products and services attached to remittances in countries of the Global South (Bateman et al. 2019, Donovan and Park 2019, Natile 2020). Moreover, the grounded and intricate materialisation of this shift away from cash to the digital remains overlooked. While processes of financial subject formation have extended their reach and influence dramatically in recent years, the ways in which these nudges are put together in practice, and for what effects, require further empirical investigation.

In order to investigate the emergence of the digital remittance-financial inclusion nexus in Ghana, this paper draws from the geographies of marketisation approach (Berndt and Boeckler 2012). The bringing of markets into being, or marketisation, constitutes one particular form of Çalışkan and Callon’s (2010:2) concept of economisation – that is, the ‘processes through which behaviours, organizations, institutions and, more generally, objects are constituted as being “economic”’. To be rendered economic, these ‘objects’ must be entangled with a heterogenous assemblage of human and non-human elements, including discourses, material and technical devices, norms and rules (Berndt and Boeckler 2009, Kear 2018). Importantly, Callon (2007a) calls these assemblages agencements. These are not only socio-technical assemblages; they also are ‘endowed with the capacity of acting in different ways depending on their configurations’ (Callon 2007a, p. 320, see also Berndt and Boeckler 2009, p. 543). Agency from this perspective is not to be reduced to the bodily capacity of the human subject but is rather distributed (i.e. diffuse and entangled) across an assemblage of apparatuses, prostheses, rules, etc., that render possible the performance of specific subjectivities (Kear 2018). As such, markets, understood as socio-technical agencements, come to constitute a ‘combination of material and technical devices, texts, algorithms, rules and human beings that shape agency and give meaning to action’ (Berndt and Boeckler 2009, p. 543).

As Berndt and Boeckler (2009) suggest, three key framings are decisive to realise markets: the conversion of goods into commodities through ‘qualification’, ‘pacification’ and ‘singularisation’; the work of valuing good through the formatting of agencies; and the organising of market encounters between goods and devices in order to render valuation possible. ⁵ In this article, I specifically focus on the second framing – that is, the grounded formatting of specific agencies that contribute to the coming into being of the utility-maximising, rational agent, or Homo economicus.⁶ I argue that a geographies of marketisation approach that is sensitive to the aforementioned behavioural turn – or what Kear (2018, p. 317) calls a ‘behavioural geography of marketisation’ – can allow for a nuanced analysis of the variegated spatialities of market making processes. Here, particular attention is paid to the extent to which location influences the capacities of a market – or an agencement – to enact particular subjectivities and format, frame and equip Homo economicus with prostheses. Kear (2018) advances the notion of ‘marketsites’ as a spatial translation of the concept of agencement in order to account for the scattered encounters between economic subjects and the heterogenous elements that configure a market. The marketsite becomes the particular place and juncture where all these elements come together to create ‘a market condition in which economic subjects behave as if they are rational’ (Kear 2018, p. 317). Importantly, marketsites are actual geographical points but are not reduced to any specific and fixed location; they are rather formed by the agencement that configures it. My analysis of how branchless banking in Ghana constructs specific subjectivities among various market actors, including mobile money agents and remittance recipients, contributes to this preliminary behavioural geography of marketisation.

Methodology

In this paper, I draw upon field research undertaken in Accra and Tamale in Ghana between September and December 2017, which generated 24 semi-structured interviews with institutional, state and private sector actors as well as 41 in-depth interviews with 28 remittance recipients. These interviews were supplemented by in-field observations and document analysis of key programmes and activities targeting remittance recipients for (digital) financial inclusion.

In semi-structured interviews with banks, microfinance institutions, telecommunication companies and fintech companies, I asked about the rationale for providing and promoting remittance services, the rise of digital remittances as well as the changing regulatory context. A further set of questions examined the links between digital remittances and financial inclusion and the different types of strategies in place to enrol remittance customers. Interviews with remittance recipients explored remittance practices, including how remittances were received, sent, spent and/or distributed as well as processes of decision-making that underpin these practices. A further set of questions explored remittance recipients’ financial practices, the type of financial institutions they deal with, their views on the different financial products and services provided by financial and commercial institutions, and the emergence of digital financial services. I also asked about the kind of changes, if any, these brought in their everyday lives. Remittance recipients were recruited through various gatekeepers, including microfinance institution, local associations and research assistants. Interviews were carried out in English and Twi in Accra, and in Dagbani in Tamale, with the vital support of three research assistants, Sonia Adu Gyamfi in Accra, and Sugri Musah Issahaku and Abdul Latif Braimah in Tamale.

The digitalisation of remittances in Ghana: an on-going construction

In Ghana, as in many other countries (Nelms and Rea 2017), mobile money services started as a domestic person-to-person money transfer product. According to an employee from one of the major Mobile Network Operators (MNOs) in the country the most common transactions in the Greater Accra region are cash-ins (cash deposits) whereas, in other regions, cash-out (cash withdrawals) transactions dominate. In effect, the peer-to-peer function of mobile money services has contributed to significantly replace former domestic remittance routes that were historically traversed by bus and taxi drivers as well as friends and family members. While the vast majority – 94% – of domestic transfers were either sent through a friend/relative or brought back by migrants themselves on visits home in 2011 (Plaza et al. 2011), only 13% of recipients received their remittance in person and in cash in 2017 (Demirgüç-Kunt et al. 2018). Instead, the percentage who reported receiving any money using a financial institution account or mobile money account increased dramatically between 2014 and 2017, from 30% to 59% (Demirgüç-Kunt et al. 2018).

However, and up until the mid 2010s, mobile money adoption had been very slow in the country. As Dzokoto and Appiah (2014, p. 41) remarked, it had not widely ‘permeated the social life’ of Ghanaians. Currently, three mobile money operators – MTN, AirtelTigo and Vodafone – offer mobile money services, with MTN being the largest and the oldest mobile money player in the market. As of February 2020, there were 14,7 million active mobile money accounts and 235 000 active mobile money agents (Bank of Ghana 2020). In contrast, Ghana only had 345 000 active accounts and 5 900 active agents in 2012 (Bank of Ghana 2019). Mobile money only started to grow in Ghana when a new e-money guideline came into effect in 2015, allowing non-bank entities (MNOs) to issue electronic money alongside regulated financial institutions. Here, I consider regulations as crucial market settings through which markets are given form; they contribute to producing new realities. At the origin of the new guideline was the view that the previous regulatory environment was hampering investment in the mobile money ecosystem as clear financial incentives for both banks and non-banks were lacking.⁷ While the Bank of Ghana was very pro-active in the domain, the changes were facilitated by a range of actors that are part of what Gabor and Brooks (2017) call the ‘fintech-philanthropy-development complex’, a new alliance of developing countries, international financial organisations, philanthropic investment firms and fintech companies that have embraced digital financial inclusion as a new development paradigm. By accepting the Maya Declaration in 2012, the Bank of Ghana had to commit to regulatory changes in branchless banking with the aim to financially include at least 70% of the Ghanaian population by 2017.⁸ Particularly active within this organisational assemblage have been the Better than Cash Alliance and World Bank-housed Consultative Group to Assist the Poor (CGAP).⁹ When asked about how the 2015 guidelines came into being, a consultant for CGAP said that the organisation played a key role:

CGAP pretty much ran that thing. There was a bunch of banking guidelines - it says the banks are going to do this business (…) But it became clear that Mobile Money Operators were the ones driving the space and so, they raise that issue. Bank of Ghana was engaged and CGAP helped with essentially regularising the operations by creating the new e-money guideline.

An additional hurdle to take-up identified by many organisations of the complex and the MNOs I interviewed was the compliance to Know Your Customer (KYC) procedures and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations. The latter requires MNOs to receive sufficient proof of identity from customers before registering them as mobile money users. When the threshold with regard to what constitutes proof of identity is too high or when customers lack IDs, financial inclusion efforts are thwarted. Supported by the momentum that the new guideline brought about, MNOs in Ghana started to figure out ways of engaging potential subscribers, from door knocking to drama sketch promoting the benefits of the service as part of their ‘Direct Consumer Contact’ approach. Furthermore, and as a response to a malfunctioning decentralised ID system – there were nine separate databases across various government and public entities – and the difficulty for financial institutions to pinpoint with precision the address of prospective customers, a national biometric identification programme coupled with a new national address system based on GPS coordinates was launched by the government in 2018. By facilitating the monitoring and tracking of persons and the assets and properties they own, it is argued that the schemes would increase the capacity of financial institutions to ensure the integrity of KYC and AML reporting. The leveraging of digital ID would also allow people to activate accounts remotely through electronic KYC, or ‘e-KYC’ (Amoah et al. 2017).

Importantly, alongside the 2015 e-money guideline, a regulatory framework for mobile money agents – the Agent Guidelines – was issued by the Bank of Ghana with the objective of promoting financial inclusion. The guideline emphasises the key tenets that underpin any contract between an agent and the ‘principal’, i.e. the e-money issuer. Through these contracts, new relationships of obligations, rights and monitoring but also of mutual reliance are established. Grocery stores, multiservice boutiques and airtime vendors are turned into mobile money agents, an essential element of the ecosystem. Not only do agents receive a new legal status by entering into this contractual relationship, they also are encouraged to transform their daily practices and behaviours. One of the new ‘permissible activities’ of agents is the active ‘marketing of credit, savings and insurance products offered and underwritten by duly licensed financial institutions’ (Bank of Ghana 2015, p. 8). As mobile money agents become financial institutions’ new front officers – and marketsites that contribute to summon Homo Economicus –, a complex range of commissions has been set up in order to sign up agents and ensure they fulfil their duties – that is, making sure cash is available at all times for customers.

Financial incentives are, however, far from being sufficient when more structural problems are at play. While mobile money in the southern parts of the country is now fairly developed and tends to work quite smoothly, the same cannot be said about the North of the country. Structurally underdeveloped since the colonial period, the Northern, Upper West and Upper East regions are zones of domestic emigration (Ouma 2015, p. 3).¹⁰ As a result, mobile money agents have much bigger liquidity issues in these regions because the demand for cash is disproportionally larger than any other types of transactions, especially cash-ins. Problems of connectivity and infrastructure are also deemed to hamper the development of the ecosystem in the North. Beyond that, operating and sustaining a mobile money ecosystem in the North proves more difficult due to a different rainfall pattern than in the South. While southern Ghana experiences two rainy seasons a year, there is only one rainy season in northern Ghana. In regions where a large part of the population in rural areas work in agriculture, this means that smallholder farmers receive their main bulk of income once a year after the harvest. For mobile money agents, this results in a significant amount of cash floating around and a heavy spike in demand during one time of the year, whereas the number and volume of transactions flatten out during the rest of the year. Unsustainable demand paired with stable and high operational costs make it difficult for MNOs to sustain a viable agent network across the country. Meteorological materialities shape the process of domestic remittance marketisation and market makers have to find ways to circumvent these constraining natural properties.

As a response to these two different modal rainfall patterns and the difficulties they cause in terms of agent network management, new transactions have to be ‘found’. According to various mobile money market actors I interviewed, the decisive factor in mobile money take-up is the development of its ecosystem and the multiplication of situations in which e-money can be used, from cash-ins and cash-outs to airtime bill and merchant payments to insurance premium and debt repayments:

It's not that easy to operate a mobile money service so that's why the mobile money guys are partnering with prepaid electricity people and what not. So, finding transactions that people have to do anyway, digitising it, and when it's digitised, people can do it from the mobile money wallet, they have a reason to go and do transactions at an agent's point, and sustain agents. It's about creating traffic at the agents’ points. (CGAP, Consultant, emphasis mine)

In the words of an employee of one of the biggest MNOs in Ghana, the market in the North remains to be ‘conquered’. Nonetheless, mobile money adoption in Ghana has now reached a certain threshold that allows the service to keep growing:

When it comes to mobile money, once you’ve hit a certain threshold, the human factor, the individual interactions and the numbers tend to influence the growth. Because a certain number of people are now using it and whoever has an account is likely to convince another person to also open a wallet. (MTN Mobile Money, General Manager)

By actively contributing to the formation of the material, regulatory, informational and human infrastructures of the mobile money ecosystem, MNOs have made possible the centralisation and incorporation of vast amounts of geographically dispersed cash into formal financial circuits. As the General Manager of MTN Mobile Money affirms: ‘Through our engagement, the banks now have access to 300 + million dollars that they can use because it is the float that is available’. Mobile money has allowed to ‘mop up cash from the system’.

Digital remittances and financial inclusion: the case of Qwikloan

I have demonstrated so far that the marketisation of mobile remittances requires the establishment, active commitment and maintenance of particular agencies. I have shown how these agencies are distributed across a heterogeneous socio-technical arrangement of human and nonhuman elements, ranging from narratives and regulations to technical and material devices. The acquisition of calculative agencies specific to the mobile money market has gradually opened the door for banks and other non-banking financial institutions to imagine the electronic equivalent of cash circulating through mobile money’ electronic trails as a new source of value. Once it became clear that MNOs in Ghana were going to hit that threshold and that mobile money take up would materialise, banks started to collaborate with e-money issuers to expand their businesses and move to previously unreachable areas. It is in this context that new financial products, such as mobile-based micro-savings accounts, mobile-based remittance-linked insurance products as well as nano-loans sprung up.

At the time of fieldwork, numerous mobile-based financial products were being either designed, tested or launched by all three mobile money operators in the country. The provision of such services requires additional tools and technologies that afford calculative agency specific to the mobile money market. By enabling access to more precise information about the regularities, qualities and volumes of monetary e-flows, these market tools and technologies classify and cluster remittance senders and receivers according to credit or insurance risks attached to them.

To illustrate how this plays out in the context of rendering remitting practices commensurate and transparent, I now turn to one specific mobile-based product offered by one major Mobile Network Operator (MTN) in partnership with a non-banking financial institution (AfB). QwikLoan is a mobile-based nano-loan product that is available to MTN subscribers. It provides them with low-value loans up to 1000 GhC (US$245). At the end of 30 days, the loan must be repaid in addition to a 6.9% loan facilitation fee. Loans can also be repaid at any time via the Qwikloan menu. If repaid after 30 days, the APR of Qwikloan amounts to 83.95%. However, if a borrower makes a late repayment, a fee of 12.5% of the remaining balance is applied. Before its first anniversary, 5 million loans worth about US$120 million had been disbursed by MTN’s Qwikloan platform in Ghana (Oppong and Mattern 2020)

Concerns about the high costs of such loans, if used regularly, have been raised notably by CGAP which commented on a similar nano-loan product in Kenya, M-Shwari¹¹:

If a customer is using an M-Shwari loan to pay for an unexpected emergency (such as an illness), the opportunity cost of not borrowing may be very high and the overall price feels affordable, especially in nominal terms (you’re talking about small loans) However, if M-Shwari becomes a regular way households finance daily expenses, this would be relatively expensive. (Cook and McKay 2015)

My evidence suggests that the aim of the financial and commercial institutions involved in the design and selling of QwickLoan is for such a product to become part of people’s everyday lives and not just an emergency loan that one may use occasionally. The advantages that have been put forward are that QwikLoan is simple, fast and does not require as much paperwork as bank loans. How does QwikLoan work? MTN subscribers who are interested in taking on, for instance, a US$100 nano-loan will need to access the MTN menu on their phone, click on ‘Apply for a QwikLoan’ and launch the request. This is where the hidden work of the Fintech company starts. For this particular financial product, MTN and AfB have been collaborating with a Fintech called JUMO; a mobile financial services platform that facilitates digital financial services such as mobile-based credit and savings in developing countries by way of USSD short codes (see Langley and Leyshon in this special issue). JUMO is a privately held company that comprises of eight country offices, with its headquarters in Cape Town, South Africa. Amongst its 320 + employees are data and intelligence scientists that have been recruited, I was told by one ‘JUMOnaut’, from companies like Amazon or Google. Whereas the MNO provides the transactional and telecommunication data to JUMO and the financial institution provides capital, JUMO brings these two entities together through technological tools that contribute to the equipment of calculative agencies engaged in the mobile money ecosystem – that is, a credit-scoring model using new technology of algorithms. In other words, MTN’s data are fed into an algorithm that is used to assign a credit score for each MTN customer.

Credit-scoring algorithms harness digital footprints generated by the use of mobile phones in order to supposedly better understand people’s behaviours and assess their creditworthiness. These credit scores extracted from a behavioural track record can help measure the appetite for financial products among so-called ‘emerging customers’. What JUMO does is to transform mobile behaviours into financial opportunities for institutions like MNOs and banks. The credit-scoring algorithm deployed by JUMO for the Qwikloan product takes into account 7000 + metrics that comprise of customers’ mobile money and telecommunication data, such as phone calls, texts, mobile money transactions and contact lists. These metric points include, among many other things, information about how long customers have been on the mobile money platform; how much money they receive/send and how frequently; what kind of transactions they do (e.g. withdrawing, cashing-in, savings); and how much money they have in their wallet. Metrics that relate to airtime activities also account for how often customers recharge/top-up; how long they have been on the network; and how often they change sim cards. It also combines GPS data, WI-FI network use as well as mobile phone battery levels. In fact, seemingly mundane details such as how often customers ‘let’ their phone battery die and how long their phone is off for do influence whether or not customers can qualify for loans and the amount they can get.

As mentioned earlier, a significant fraction of domestic mobile-based person-to-person transfers actually represent domestic remittances; many mobile money users in the northern regions also happen to be remittance recipients. As a result, encouraging users to transact a certain amount of e-value on a frequent basis for a relatively long period in order to become eligible to a financial product constitutes an attempt to influence the ways in which remittance recipients receive, use and manage their remittances. When explaining the ways in which remittances can play an important role in making subscribers eligible to QwikLoan, the Country Director of JUMO made it clear that it is preferable for remittances to stay in the e-wallet rather than being cashed-out immediately. What’s more, subscribers that receive remittances have much better chances to be eligible than those who load their account themselves. Receiving frequent amounts of money from other people means that one may be more able to pay back, even in times of temporary crisis:

But it's important to us that you're not constantly in a rush to go and pick up money (…) for instance, people that would use mobile money to buy airtime, that's a good behaviour for us because the person (…) develops a certain kind of life around mobile money, as opposed to somebody who's just like: ‘Ok, send me money and boom it's gone’(…) Also, importantly, we want to see that you're not only loading your account, but people are sending money to this account (…) because when this happens, then we know that by virtue of these other relationships, there is reasonable stickability on the account (JUMO, Country Director).

One commitment device that JUMO uses to encourage potential loan takers to ‘behave well’ is text messages. JUMO frequently sends text messages that not only promote the use of financial products but also give financial advice. They act as nudges that constantly remind the subscribers to do, think and plan things in particular ways. They contribute to the transformation of mobile money users and remittance receivers into financially responsible subjects that should make ‘better choices’ in order improve their lives:

Tomorrow I'm going to send a text message to seven million customers that are active MTN mobile money customers. That is bigger than any bank. Just by virtue of one SMS I have sent, I'm going to tell people to do something that enhances their financial lives. Just one SMS. That's impossible for a bank to reach, even over a year. So, the ease of doing that part of the business - customer education - the ease of achieving things like: ‘Ok, you need to be responsible with your life, you need to take responsibility’ and then because you're responsible, you're rewarded - so, the ease of being able to communicate all of these targeted specific messaging to different segments allows those people to at least be influenced much more positively … Because the bigger part of this conversation is not that we're just giving them loans, we are educating them about finance, we are letting them get a clear idea about how to live their lives - I mean taking responsibility and all of that, and in addition to that, we are building some credit history for them through all the information that we gather on customers (JUMO, Country Director, emphasis mine).

While the influence of these text messages on the shaping of financial subjectivities is not to be exaggerated, it is worth stating that when JUMO sends a text to every active mobile money subscriber of the MNO they work with, they manage to reach more than 25% of the Ghanaian population. For subscribers willing to become eligible for such financial products, new ambiguities are created, and economic decisions have to be made: What is the proportion of the money one receives that should be saved and for how long? How much of the remittances should be prioritised for savings, consumption, but also for loan repayments? Should one ask people to send money to one’s mobile money account – rather than, when possible, hand-to-hand cash transactions – even though a fee is incurred? By propelling these new uncertainties that push mobile money receivers to behave in more ‘responsible’ and ‘efficient’ ways, market devices produce new realities and contribute to the coming into being of the Homo Economicus. In addition to mobile money agents, mobile phones – through which financial transactions are performed and certain nudges operate – need to be understood as mobile marketsites that follow users everywhere and at all times: a marketsite in the pocket.

Nudges, choices and curtailment

The critical literature on financial inclusion has long argued that the social embeddedness of microcredit agents within their communities plays a significant role in enrolling new clients and encouraging actual ones to take out new loans (e.g. Young 2010). They play the role of ‘economic translators’ between local norms, values and timescales and the imperatives of formalisation (Waters 2018, p. 403). Crucially, while this role of economic translators had originally been played by local human actors, the emergence of mobile money creates new possibilities for financial institutions to have not only human actors but also technological devices permeating actual and potential customers’ financial everyday lives.

When I asked about their enrolment strategies of new customers in general, and remittance recipients in particular, a representative of one of the main banks in Ghana responded as follows:

Basically, we're relying on mobile money, linking it to a savings account that also has a micro-insurance component, reaching out to people in rural areas, especially those who come together to save in groups. You realise that they come together, they will save as a group of let's say 25 people. Then, at the end of the day, they on-lend to each other (…) But what interests us is that they keep money in boxes, under their bed, or keep it at home. No interest accrues on it, they have no relationship with any financial institutions (…) Currently, we are working on how we can link that kind of model into the formal financial services sector. It is like bringing the informal sector to meet the formal financial sector. We call it ‘savings linkages’. We are looking at it through technology, through domestic money remittances; how best we can link them into our financial … the core business that we do.

In Ghana, the increasing efforts of financial institutions to recognise and build on these networks come hand-in-hand with broader attempts to turn non-market financial relations into data. In fact, while these ‘savings linkages’ were deemed necessary to increase bank deposits, they only represented the first stage of a broader plan of action. The bank representative continued:

And we are also looking at how best we can also lend to them – because they lend to themselves – so that they can use their savings as a guarantee (…) we are also looking at coming up with a retirement package, something you can save towards old age.

Mobile phones, and the wallets attached to them, act as mediating calculative tools between commercial and financial institutions and so-called ‘informal’ financial arrangements. In Tamale, several remittance recipients I spoke to were using some of the functions of mobile money for their Rotating Savings and Credit Associations (ROSCAs) and Accumulating Savings and Credit Associations (ASCRAs).¹² However, at the time of field research, I did not come across anyone using the loan function yet. While Kear (2016, p. 262) argues that what he calls the financialisation of ROSCAs in the US has not led to accumulation by dispossession due to the absence of ‘pre-existing trust networks to be “dispossessed”’, the story is likely to be rather different when products such as mobile-based nano-loans are imposed onto existing circuits of debt and exchange in countries such as Ghana. In effect, and drawing upon the work of Elyachar (2005, p. 143), I have argued elsewhere that so-called ‘informal’ circuits of saving and borrowing practices, which in turn enable practices of gift exchange, are essential to the production of relational value – that is, the value ‘attached to the creation, reproduction, mobilisation and extension of relationships’, which are essential to processes of social reproduction (Guermond 2020). Because of the recent emergence of such ‘translators’ (mobile wallets) and the even more novel mobile-based financial products in Ghana, we are yet to fully understand whether and how these new technologies channel remittances away from these already-existing arrangements and dispossess remittance recipients of their capacity to produce relational value.¹³ A glimpse of such impacts can, however, be given through a story that Abdallah (carpenter, Tamale, brother, Italy) told me:

Anytime I want to give him [his brother] money to do something for me or just to use it for his own personal issues, I will have to call him and ask him whether I should pay it into his mobile money wallet or if he will come and collect it himself because he may have a loan to repay. Once money is paid into the account, it will be deducted automatically to repay the loan. So, unless he gives me the go ahead to pay to his account, I wait for him to come (…) Just some few months ago, his wife was admitted to the hospital. I was on my way home from the hospital when he called me and said that the hospital asked him to pay for some drugs which was 150 GhC. So, I went and withdrew the money from the ATM machine to pay it into his mobile money account and remembered that he had been taking loans from MTN mobile money. So, I called him to find out whether I could send the money to his mobile wallet. He then he told me that he was on a loan and gave me his wife’s mobile wallet account instead.

With mobile-based nano-loans such as QwikLoan, when debtors are late, their capacity to decide where to channel the money they have and/or receive in their mobile money account is dramatically curtailed, even in case of emergencies. Money, including money remittances that sit or are sent to their mobile money account, is deducted automatically until the loan is fully repaid. This may have significant consequences when an emergency arises, as Abdallah’s account showed. What we are witnessing here is the increasing capacity – automated capacity – of commercial and financial institutions to hamper strategies of financial juggling and practices of hierarchisation of debts, expenditures and investments that contribute to the production of people’s social and economic futures (Guérin et al. 2013).

Conclusion

This article has explored how the digitalisation of remittances is deeply intertwined with the behavioural turn in development and, more specifically, the advancement of digital financial inclusion. Drawing from a geography of marketisation framework that is attuned to this behavioural shift – or what Kear (2018, p. 317) calls a ‘behavioural geography of marketisation’ –, I have traced the emergence and take up of mobile money and digital domestic remittances in Ghana. The construction of the material, regulatory, informational and human infrastructures of the mobile money ecosystem depends upon a wide range of commitment devices and settings, which in turn play a decisive role in establishing particular agencies and contributing to the coming into being of the Homo Economicus. Through market devices such as credit-scoring algorithms and text messages, mobile money users – including remittance customers – are classified and encouraged to rethink their economic decisions and alter their financial practices in order to become eligible for new digital financial products and services, including digital nano-loans such as Qwikloan. Mobile phones come to constitute mobile marketsites through which mobile money users are nudged to rectify their choices. However, while I acknowledge the need for more empirical research on the impacts of these new financial products and services on the everyday lives of borrowers, I argue that the imposition of such products onto already-existing financial practices and circuits of exchange runs the risk of hampering vital practices and strategies of social reproduction attached to remittances. Rather than expanding people’s choices and equipping them with further ‘financial capabilities’, the digital remittance-financial inclusion nexus works at narrowing decision-making processes in an automated fashion.

As ‘Africa digital credit goes West’, more critical work on the increasing prevalence of digital financial inclusion – beyond payment systems – is urgently required (Oppong and Mattern 2020, p. 1). In May 2020, and partly as a response to the Covid-19 crisis, Ghana became the first country to launch a digital financial services policy with the underlying target of formally including 85% of Ghanaians by 2023 (Buruku 2020). Yet, as mentioned earlier, concerns have recently been raised with regards to recent digital financial products and the rate of late repayments and defaults in countries such as Kenya and Tanzania. In Kenya for instance, where 27 percent of adults have taken at least one digital loan (Totolo, 2018), a survey conducted by CGAP has revealed that digital loans are driving Kenyans into multiple debts (Izaguirre et al. 2018). The World Bank-housed organisation, renowned for its relentless promotion of financial inclusion, has even called for a slowdown in digital credit’s growth in East Africa (ibid). Further empirical research on the socio-economic and psychological impacts of digital financial products and services on often first-time borrowers is essential as digital loans and insurance become increasingly accessible in many countries in Africa, and beyond.

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Additional information

Notes on contributors

Vincent Guermond

Dr Vincent Guermond is a Research Associate at Royal Holloway, University of London. His research and teaching interests are in the areas of the everyday geographies of debt and finance, migration and development, and social reproduction. He has published in a range of journals including Progress in Human Geography, Geoforum, Environment and Planning A, World Development, and Development and Change. His new book Remittances and Financial Inclusion: Contested Geographies of Marketisation in Senegal and Ghana is forthcoming with Routledge.

Notes

1 Here, mobile money is defined as a branchless banking model that provides financial services through a mobile device.

2 Inspired by the work of scholars in economic sociology and other cognate disciplines (e.g., Çalışkan and Callon 2009, 2010), geographies of marketisation are understood as a ‘modality of economization’ and focus on how concretely markets expand socially and spatially (Berndt and Boeckler 2012, p. 199).

3 ‘Choice architecture’ is a technique which enables development professionals and practitioners to (re)organise and control how decisions are made, thus nudging peole to behave in certain ways (Klein 2017). The point here is not to argue that there is such thing as a monetary life without nudges but rather to emphasise how they are designed, for whom and to what ends. I’m grateful to Reviewer 2 for pointing this out.

4 Remittance-linked products are products such as savings account, insurances and loans that become available for remittance recipients, whereas remittance-backed products such as remittance-backed mortgages and loans are products, which use remittance receipts to assess and provide credit loans.

5 For something to become a commodity, it must be qualified – that is, ‘rendered a tradable object in the first place’ (Ouma 2015, p. 32). Second, for goods to be exchanged, they need to be disentangled from certain network relations – those of the sellers – and attached to others – those of the buyers. In other words, goods need to detached – or pacified – from their original context of production and become unambiguous in order to enable quantitative and qualitative valuations to attach property rights and a price to them. Finally, they must be singularised, that is reattached to the buyers’ world and be accepted as legitimate (ibid).

6 Here, the figure of the Homo Economicus is understood in its neoliberal form as ‘entrepreneurs of themselves’ who maximise the returns on their choices through constant cost/benefit calculations. In the context of the mainstreaming of behaviourism in development, the Homo Economicus is thought to exist albeit not as an individual, self contained subject. Rather it is kept alive by a process of configuration involving a series of nudges and experiments that frame actions. For a more detailed discussion on this ‘new’ Homo Economicus, see Berndt and Boeckler (2012) and Kear (2018).

7 For instance, I was told that the previous regulation - based on what is called a bank-led ‘many-to-many’ model - was preventing exclusive partnerships, meaning that any investments in a new product would automatically benefit all the other competitors.

8 The Maya Declaration constitutes a shared commitment to financially include the 2.5 billion unbanked and set up national financial inclusion strategies in collaboration with private sector actors (Gabor and Brooks 2017).

9 While the governance structure of the Better than Cash Alliance is relatively opaque, the main aim of this collective is rather explicit: ‘to accelerate the transition from cash to digital payments globally through excellence in advocacy, knowledge and services to members’ (See Mader 2016b, p. 71).

10 During the colonial period, active antidevelopmental policies towards northern Ghana were implemented in order to ‘free’ labour to work in mines and commercial farms in the South (Scully and Britwum 2019, see also Nyaaba and Bob-Milliar 2019). After a period of ‘formalisation interlude’ between the 1930s and 1970s which nonetheless saw northerners continue to migrate to the South, the economic crisis in the early 1980s followed by two decades of structural adjustment programmes further exacerbated the precarity of livelihoods of workers and farmers in the North (Scully and Britwum 2019, p. 413). Nowadays, remittances sent by both migrant men and women often working in the informal service sector in not only cities in the South but also, and increasingly, small and rural towns, constitute a significant source of income for many households in the northern regions (Luginaah et al. 2009, Van Der Geest 2010).

11 For more detailed information about the average costs of digital credit across the continent, see Kaffenberger and Chege (2016)

12 In contrast to ROSCAs where savings are pooled and then instantly redistributed to members in rotation, the savings that are pooled in ASCRAs are not immediately returned – at least, not for the first few months - but are ‘allowed to accumulate, to make loans’ (Bouman 1995, p. 375). 

13 In several East African countries, mobile lending is leading to a crisis of social reproduction, with millions of borrowers facing difficulties to repay their digital loans on time (see for instance Donovan and Park, 2019). A study found that 50 percent of digital borrowers in Kenya and 56 percent in Tanzania repaid a loan late, and 12 and 31 percent, respectively, defaulted (Izaguirre et al. 2018). Easy, unregulated digital lending, Donovan and Park (2019) argue, contributes to the ‘foreclosing of borrowers’ futures’.