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April 28, 2026 Nartey Law Firm No Comments

ECONOMIC SYSTEMS AND HOW THEY SHAPE PROCUREMENT LAW: A COMPARATIVE ANALYSIS .

ECONOMIC SYSTEMS AND HOW THEY SHAPE PROCUREMENT LAW: A COMPARATIVE ANALYSIS .

1.INTRODUCTION.

Governments have traditionally held the responsibility for a broad range of functions including ensuring national defense, building and maintaining the national infrastructure, assessing and collecting taxes and revenues, promoting public health and well being, and providing education

The execution of these responsibilities requires the acquisition of goods, works, and services, thereby making public procurement a significant channel through which public funds are expended. Government agencies must therefore ensure that procurement processes are conducted in a fair, transparent, and accountable manner. In addition,they are increasingly required to adopt modern tools including electronic procurement systems to enhance efficiency.[1]

To this end, Ghana took a significant step through a reform initiative on 25 October 2025 transitioning from manual to fully digital financial management systems.

Announced by the Deputy Finance Minister; Mr. Thomas Nyarko Ampem, , this reform mandates that effective January 2026, all public expenditure be processed exclusively through the Ghana Integrated Financial Management Information System (GIFMIS). This reform was introduced to enhance efficiency, strengthen expenditure control and combat corruption within the financial management framework.[2]

The Organisation for Economic Co-operation and Development (OECD) defines Public Procurement as the purchase by governments and state-owned enterprises of goods, services and works. It accounts for a significant amount of total general government expenditure.[3] However, procurement is not merely an administrative purchasing activity; it is a legal and economic mechanism through which the State allocates resources within the economy.[4]

Policies and processes regarding procurement are often reflective of the economic system practiced. The crux of this article is to primarily focus on the three traditional economic systems, for the purpose of examining their structures, their advantages and disadvantages. It will also provide a concise overview of the public procurement law in Ghana and undertake a comparative analysis of how the three most prominent economic systems have shaped procurement policies, regulatory frameworks and laws in specific countries.

THE LEGAL FRAMEWORK OF PUBLIC PROCUREMENT.

In Ghana, Public procurement is governed by the Public Procurement Act, 2003 (Act 663). The Act established the Public Procurement Authority as the regulatory body responsible for the effective implementation of public procurement law in Ghana. [5]The Authority regulates, monitors and supervises public procurement processes to ensure transparency, accountability, efficiency and value for money in use of public funds.

For instance, when a road needs to be constructed the procurement agency would identify a need for a procurement plan, advertise the contract and invite bids from qualified contractors. The bids are then evaluated and the one which provides the most value for money is awarded with the contract.[6] All these activities are supervised and overseen by the Authority.

In OECD countries, public procurement accounts for approximately 13% of gross domestic product (GDP), while globally it ranges from an average of 13% to 20% of GDP.[7] In monetary terms, public procurement spending is estimated to amount to nearly USD 9.5 trillion worldwide.[8]

Given the significant impact of these figures on global GDP, procurement cannot be viewed in isolation from the systems that govern it. The next phase of this analysis explores the dominant economic models and the specific ways they inform and refine procurement frameworks across different jurisdictions.

CONCEPT AND CLASSIFICATION OF ECONOMIC SYSTEMS

According to the Corporate Finance Institute (CFI), Economic systems are the means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country[9]. Economic systems regulate the factors of production, including land, capital, labour and physical resources.[10] They also shape how resources are allocated, how prices are determined, and the extent to which government intervene in economic activity. The economic system adopted by a country significantly influences and determines the structure.

Among the most prominent systems are the market economy, the planned economy, and the mixed economy, each reflecting different balances between private enterprise and state control. Understanding the distinctions between these systems is essential, as they significantly influence public procurement processes, and overall economic development.

THE MARKET ECONOMY

A market economy is characterized by minimal state intervention, with economic decisions driven primarily by supply and demand. Resource allocation, pricing and production are determined through market interactions rather than centralized planning. It is also known as a free market economy or a capitalist economy[11] and is most notably practiced in Singapore and Hong Kong.

Beyond definition, what truly distinguishes market economies is the belief that when economic decisions are made independently by buyers and sellers rather than by the government, the allocation of resources tends to be more efficient. For example, in Ghana, the transition from cash transactions to digital and mobile money payment systems, reflects how network providers and banks have responded to its consumer demands following the introduction of Mobile Money by MTN in 2009. Although the initiative was introduced within a regulated framework with significant restrictions, its rapid expansion was driven largely by market demand rather than government compulsion.[12] The success of this initiative encouraged other telecommunications companies such as Vodafone and Airtel-Tigo to introduce similar mobile money services in order to remain competitive within the market.

This dynamic highlights the core strength of the market system: its ability to foster innovation through competition rather than central planning. However, the efficiency of such a decentralized model is often balanced against its inherent volatility. To understand how these market forces are managed in practice, it is necessary to examine the specific attributes, strengths, and systemic limitations that define the free market framework.

In a market economy, private ownership and competition sit at the centre of economic activity. Individuals and firms control resources and make independent decisions about production and consumption, rather than waiting for instructions from some distant bureaucratic office. In Ghana, this is visible in the formal sector, where banks, manufacturers, and service providers operate within legal frameworks but ultimately respond to consumer demand. The constant pressure to outperform rivals forces businesses to improve quality, reduce costs, and offer prices that consumers can actually tolerate.

Closely tied to this is the way prices are determined. Instead of being fixed by the state, prices emerge from the interaction between supply and demand. These price signals quietly coordinate the entire economy, telling producers what to make and consumers what they can afford. When scarcity hits, as seen during the COVID-19 period in Ghana, prices adjust quickly, sometimes uncomfortably so, reflecting the underlying imbalance between what is available and what is wanted.

The role of government in such a system is deliberately limited. Ideally, it focuses on maintaining law and order, enforcing property rights, and providing essential public goods, while leaving the market to handle the rest. The theory sounds clean and elegant. Reality, as usual, is messier, but the general idea remains that less interference allows the system to function more freely.

Advantages And Disadvantages of Market Economies

Market economies promote efficiency, innovation and consumer choice. Competition tends to improve consumer welfare by expanding choice and keeping prices relatively competitive.

However these systems are not without limitations. Market failures may occur particularly in the presence of monopolies. Inequality is also a persistent concern , as wealth and resources tend to concentrate among a limited segment of the population and which potentially undermines competition. Over time, wealth and productive resources can become concentrated in the hands of a few, reducing competition and making the “free” market feel suspiciously controlled, just by private actors instead of the state.

PLANNED ECONOMIES

In contrast a planned economy is an economic system characterized by centralized control where the state determines pricing, production and distribution. Examples of planned economies are communist and socialist systems where facets of economic productions are controlled by government.

Essentially, under planned economies, producers and sellers sell their products at prices predefined by the government. The overall objectives of such countries are to focus on the overall growth and development of the economy at large rather than focusing on benefitting private individuals. The former Soviet Union was a classic example of a planned economy, where the State owned all the means of production and all economic decisions between the years of 1922 to 1992.[13] However, it faced several challenges which led to its collapse. These challenges are addressed further in this article. There are several characteristics of planned economies, below are some basic characteristic and key attributes of a planned economy.

Under planned economies, the government owns most of the resources and businesses and controls directly the economic activity of the country.
The prices of goods and services are set by the government by assessing the value and the importance of the products and services provided to it by the producers or the sellers
The distribution, pricing and decisions relating to the goods and services to be provided are based on predefined goals and targets established by the government or government agencies
The government is extensively involved in every aspect of the economic life which includes the production levels, resource allocation, distribution.

Advantages And Disadvantages Of Planned Economies.

A planned economy offers several advantages, particularly in terms of regulation and social welfare. One major advantage is that producers cannot engage in malpractices because the government determines production levels and closely supervises economic activities. Since the State controls what is produced and how it is distributed, opportunities for exploitation, artificial scarcity, and unfair business practices are significantly reduced.[14]

Another advantage is that consumers and buyers are protected from exorbitant prices. In a planned economy, prices are set by the government rather than by market forces. This helps to ensure affordability and prevents price manipulation that may arise from monopolies or excessive profit-seeking behaviour. As a result, essential goods and services are often made accessible to the general population.[15]

Additionally, resources are often distributed more equitably across different sections of the economy. The government allocates resources according to national priorities and social needs rather than individual wealth or purchasing power. This promotes social equality and aims to reduce disparities in income and access to essential services.

Despite these advantages, a planned economy also has notable disadvantages. One major drawback is that producers are unable to maximize profit due to the complete control of the government over production, pricing, and distribution of goods and services. The absence of profit incentives may reduce motivation, innovation, and entrepreneurial initiative.

Furthermore, due to the lack of competition among producers, efficiency and product quality may be adversely affected. Competition often drives businesses to improve services and innovate; however, in a planned economy, the absence of competitive pressure may lead to complacency, inefficiency, and lower standards of goods and services.

Another disadvantage is that consumers do not enjoy freedom of choice and variety. Since the government determines what is produced, consumers are often limited to certain products and services. In essence, their preferences may not be fully considered, resulting in limited options in the marketplace.[16]

6.MIXED ECONOMIES

A mixed economic system integrates elements of both market economy or capitalism and planned economy or socialism, balancing private property rights and economic freedom with government oversight to further social objectives. It benefits from the advantages of these economies whiles also experiencing some disadvantages.

Ghana is notably considered as a having a mixed economy. Ghana’s economy is largely market based but there is still a significant government intervention and interactions. While private enterprises and market forces of demand and supply drive much of economic activity, the government plays an active role in regulating key sectors, providing essential public services and formulating policies aimed at promoting national economic development.[17]

Advantages And Disadvantages Of Mixed Economic System.

A mixed economy combines several of the desirable qualities of both a market (capitalist) economy and a planned (socialist) economy. By incorporating elements of private enterprise alongside government intervention, it seeks to balance efficiency with social welfare. This hybrid structure allows the private sector to drive innovation and competition while enabling the government to regulate economic activity in the public interest.

One major advantage of a mixed economy is increased efficiency and productivity due to market-based incentives. Since private businesses operate alongside public institutions, firms are motivated by profit incentives to innovate, reduce costs, and improve the quality of goods and services. This competitive environment promotes economic growth and allocative efficiency while still allowing for government oversight where necessary.[18]

Another significant advantage is the provision of welfare protections for the poorest members of the population. Unlike a purely market-based system, a mixed economy allows the government to implement social security programs, public healthcare, education, and other welfare policies. These interventions help reduce inequality, protect vulnerable groups, and promote a more equitable distribution of resources.

Despite these advantages, a mixed economy also has certain disadvantages. One key limitation is that funding welfare policies requires higher taxation. Increased taxes may reduce individuals’ disposable income and potentially discourage investment and entrepreneurship. Businesses may also face higher operational costs, which can affect economic growth.

Furthermore, government intervention may distort market forces, leading to inefficiencies and the misallocation of resources. Excessive regulation or poorly designed policies can reduce competition, slow innovation, and create bureaucratic obstacles that hinder economic performance.[19]

Additionally, mixed economies may be susceptible to regulations shaped by influential business interests. In some cases, regulatory policies may serve private interests rather than the broader public interest, leading to regulatory capture and reduced fairness within the economic system.[20]

THE INFLUENCE OF ECONOMIC SYSTEMS ON PROCUREMENT LAW

Comparative Case Studies: USSR, China, and India

In the modern world, capitalism, also known as a free market economy and the mixed economy system, are the most widely adopted economic system. This development is largely the result of significant historical events. A notable example is the former Union of Soviet Socialist Republics (USSR), which operated under a strict communist and centrally planned economic system during the twentieth century. The Soviet Union’s experiment with a highly centralized planned economy contributed to its economic stagnation and eventual collapse in 1991.

The system was characterized by extensive state control over production and distribution, limited market incentives, and minimal private enterprise. Over time, this led to inefficiency, shortages, declining productivity, and widespread poverty. In addition to economic difficulties, political instability and rising nationalist movements within various republics further weakened the Union. Ultimately, the Soviet Union was formally dissolved on 25 December 1991.[21]

Another useful example is the People’s Republic of China, which also operated under a planned economic system for much of the twentieth century. However, following economic challenges and limited growth under strict central planning, China introduced significant economic reforms in 1978. Rather than maintaining a rigid planned economy, China adopted a hybrid or mixed economic system that combines state ownership with private enterprise, foreign investment, and market-based incentives. These reforms were partly motivated by the desire to avoid the type of economic collapse experienced by the USSR. As a result of these changes, China has experienced rapid economic growth and is currently one of the largest economies in the world.[22]

Procurement in China is governed by the Government Procurement Law of the People’s Republic of China 2002 The law reflects both market-oriented principles and elements of planned economy which has an element of State control, consistent with China’s mixed/ hybrid economic system.

For example, Article 3 of the Act provides that ‘‘government procurement activities shall adhere to the principles of openness, transparency, fair competition, impartiality, and good faith. These principles clearly reflect characteristics of a market economy, particularly the emphasis on competition and transparency.’’[23]

However, the Law also retains features of a planned system. Article 7 states that ‘‘government procurement shall be conducted through both centralized and decentralized methods, and that items subject to centralized procurement shall be determined according to a centralized procurement catalogue published by people’s governments at or above the provincial level. This provision demonstrates continued government oversight and control over certain procurement activities.’’[24]

Similarly, after independence, India adopted a mixed economy to balance public and private sector roles. Early Five-Year Plans and the Industrial Policy of 1948 guided this transformation, though progress was slow due to limited private capital. The 1991 liberalization revitalized the mixed economy: foreign brands entered the market, foreign direct investment (FDI) rose significantly, and consumers gained access to a wider variety of products, improving living standards. India’s experience highlights how economic systems impact business, investment, and consumer welfare.[25]

Public Procurement in Ghana within a Mixed Economy Framework

Lastly, unlike purely state controlled economies or planned economies, Ghana operates a mixed economic system, which distinguishes it from purely state-controlled or centrally planned economies. In this system, public institutions, private enterprises, multinational corporations, small and medium-sized enterprises (SMEs), and informal traders all actively contribute to economic activity, reflecting a blend of market-driven and government-directed mechanisms. A key feature of this framework is the regulation of public procurement,

The Act mandates that procurement processes by public entities be conducted through competitive methods, including international competitive tendering, national competitive tendering, requests for quotation, and restricted tendering. [26]This allows competition between both government and private entities.

This structured approach ensures transparency, accountability, and efficiency, while simultaneously promoting both public oversight and market competition. Consequently, Ghana’s procurement system reflects the interplay between market principles and state regulation, demonstrating the country’s broader economic strategy of balancing efficiency with social and developmental objectives. Beyond procedural mechanisms, the Public Procurement Act 2003 (Act 663) also addresses ethical conduct in procurement. Section 93(1) criminalizes corruption, stipulating that “entities and participants in a procurement process shall, in undertaking procurement activities, abide by the provisions of article 284 of the Constitution.” [27]This provision reinforces integrity and fairness, ensuring that procurement decisions are not influenced by personal gain or malfeasance.

From the perspective of a mixed economy, Section 93 exemplifies how regulatory oversight can protect public resources while supporting private enterprise and competition. By enforcing anti-corruption measures, the state safeguards market confidence, encourages foreign and domestic investment, and ensures that SMEs and other market participants operate on a level playing field. In essence, the Act integrates market efficiency with social and ethical governance, which is a hallmark of mixed economies: combining the innovation and competitiveness of markets with the corrective oversight of government intervention.

LESSONS FOR REFORM AND POLICY DEVELOPMENT

The historical experiences of the Soviet Union, China and India provide valuable lessons for modern mixed economies such as Ghana. These countries highlight both the strengths and weaknesses of different economic systems and demonstrate how a balance between state control and market forces can promote sustainable development.

One important lesson is the fragility of central planning as seen in the collapse of the Union of Soviet Socialist Republics USSR. A system based on total state control over production and distribution limited innovation and resulted in persistent shortages of goods. The absence of market incentives reduced efficiency and weakened productivity over time. This illustrates that an economy without competitive pressures is unlikely to sustain growth or adaptability.

In contrast China’s economic reforms beginning in 1978 demonstrate the success of a mixed economic approach. By introducing market mechanisms such as private enterprise competition and foreign investment within a state guided framework China achieved rapid economic growth. The government maintained oversight while allowing market forces to improve efficiency. Its procurement approach shows that centralized coordination can exist alongside fair competition without undermining performance.

India’s economic liberalization in 1991 further reinforces the importance of market openness. Prior to these reforms heavy regulation restricted growth and limited consumer choice. The introduction of foreign direct investment and competition improved efficiency expanded the range of goods and services and raised living standards. This case shows that liberalization when carefully managed can significantly enhance economic welfare.

These lessons are directly relevant to Ghana’s procurement framework within its mixed economic system. The Public Procurement Act 2003 Act 663 provides a strong legal foundation aimed at balancing efficiency with accountability. The Act promotes competitive procurement methods such as International Competitive Tendering and National Competitive Tendering to ensure value for money while maintaining transparency. Section 93 (1) of the Act criminalizes corruption and is intended to protect market confidence and ensure fairness particularly for small and medium sized enterprises.

Despite this strong legal framework there is often a gap between theory and practice. One major issue is the frequent use of sole sourcing which undermines competition. Although intended for exceptional circumstances it is often applied more broadly thereby weakening market discipline. Efforts to address this challenge were highlighted in the State of the Nation Address on 27 February 2025 where the President announced plans to tighten procurement rules and restrict sole sourced contracts.[28]

Political interference also presents a significant challenge. While the law emphasizes impartiality procurement decisions are sometimes influenced by political considerations. This reduces trust in the system and discourages fair participation. Strengthening the independence of the Public Procurement Authority is necessary to ensure that procurement decisions are made based on merit rather than external pressure.

Another concern is bureaucratic delay. The combination of centralized and decentralized procurement processes can create inefficiencies and slow down project implementation. This can increase costs and discourage private sector involvement. The adoption of electronic procurement systems would improve efficiency by streamlining procedures increasing transparency and reducing opportunities for corruption. As stated above, Ghana has already initiated steps in this direction through ongoing digital financial management reforms including the transition to the Ghana Integrated Financial Management Information System GIFMIS which is expected to strengthen expenditure control and reduce manual inefficiencies.

Finally, enforcement of ethical standards remains weak. Although legal provisions against corruption exist prosecutions are limited which reduces their effectiveness as a deterrent. Establishing specialized procurement audit units within the Auditor General’s office would allow for continuous monitoring and ensure compliance in real time rather than after the fact.

Overall, the experiences of the Soviet Union China and India demonstrate that neither complete state control nor unrestricted markets are sufficient on their own. A balanced mixed economy is more effective when supported by strong institutions and consistent implementation of policies. For Ghana improving procurement practices through enhanced transparency reduced political interference and stronger enforcement will help bridge the gap between theory and reality and support long term economic development.

9.CONCLUSION

The design and the operation of public procurement law is fundamentally shaped by the underlying economic system. Market economies emphasize efficiency and competition, planned economies prioritize control and equity while mixed economies seek to balance both.

Ghana’s mixed economic model provides a sound foundation for an effective procurement system. However achieving its full potential requires consistent implementation, strong institutions and a continued commitment to transparency and accountability.

Ultimately, effective procurement law must balance value for money, transparency and efficiency with broader socio-economic growth and promote the responsible management of public resources.

[1] Thai (ed), International Handbook of Public Procurement (Public Administration and Public Policy, CRC Press 2009) 35 Accessible from: https://api.pageplace.de/preview/DT0400.9781351562393_A30892272/preview-9781351562393_A30892272.pdf accessed 10 February 2026.

[2] Ghanaian Times, Public expenditure goes electronic effective Jan. 2026, Ghanaian Times (24 October 2025) Ghanaian Times Accessible from https://ghanaiantimes.com.gh/public-expenditure-goes-electronic-effective-jan-2026/ Accessed 4 March 2026

[3] Organisation for Economic Co-operation and Development (OECD), ‘Public procurement spending’ in Government at a Glance 2013 (OECD Publishing 2013).

[4] Thai (ed), International Handbook of Public Procurement (Public Administration and Public Policy, CRC Press 2009) 35 Accessible from: https://api.pageplace.de/preview/DT0400.9781351562393_A30892272/preview-9781351562393_A30892272.pdf accessed 10 February 2026.

[5] Public Procurement Act 2003 (Act 663) s 1(1)

[6] Public Procurement Act 2003 (Act 663) ss 21–23.

[7] World Bank, ‘Global Public Procurement Database: Share, Compare, Improve!’ (23 March 2020) World Bank https://www.worldbank.org/en/news/feature/2020/03/23/global-public-procurement-database-share-compare-improve accessed 16^th February 2026.

[8] Ibid

[9] Corporate Finance Institute, Economic System (Corporate Finance Institute, 16 February 2026) https://corporatefinanceinstitute.com/resources/economics/economic-system/ accessed 16 February 2026

[10] Ibid

[11] Market Economy vs Planned Economy (GripInvest, undated) https://www.gripinvest.in/blog/market-economy-vs-planned-economy accessed 16 February 2026.

[12] GSMA, MTN Mobile Money: Spotlight on Ghana (GSMA Mobile for Development, 2025) https://www.gsma.com/solutions-and-impact/connectivity-for-good/mobile-for-development/country/ghana/mtn-mobile-money-spotlight-on-ghana/ accessed 16 February 2026.

[13] How did the Soviet economy work and why did it fail? (Russia Beyond, 2019) https://www.rbth.com/history/330630-how-soviet-economy-work accessed 16 February 2026

[14] Market Economy vs Planned Economy (GripInvest, undated) https://www.gripinvest.in/blog/market-economy-vs-planned-economy accessed 16 February 2026.

[15] Ibid

[16] Market Economy vs Planned Economy (GripInvest, undated) https://www.gripinvest.in/blog/market-economy-vs-planned-economy accessed 16 February 2026.

[17] Tejvan Pettinger, Mixed Economy – Economics Help (EconomicsHelp.org, 2023) https://www.economicshelp.org/blog/glossary/mixed-economy/ accessed 20 February 2026.

[18] Greg Young, Mixed economy (Encyclopædia Britannica, online) https://www.britannica.com/money/mixed-economy accessed 18 February 2026.

[19] Tejvan Pettinger, Mixed Economy – Economics Help (EconomicsHelp.org, 2023) https://www.economicshelp.org/blog/glossary/mixed-economy/ accessed 20 February 2026.

[20] Mixed Economy (EBSCO Research Starters, 2023) https://www.ebsco.com/research-starters/political-science/mixed-economy accessed 16 February 2026

[21] Economy of the Soviet Union (Wikipedia, n.d.) https://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union accessed 16 February 2026

[22] China’s Role in the Global Economy (EBSCO Research Starters, 2024) https://www.ebsco.com/research-starters/economics/chinas-role-global-economy accessed 16 February 2026

[23] Government Procurement Law of the People’s Republic of China 2002, art 3.

[24] Government Procurement Law of the People’s Republic of China 2002, art 7.

[25] Market Economy vs Planned Economy (GripInvest, undated) https://www.gripinvest.in/blog/market-economy-vs-planned-economy accessed 20 February 2026.

[26] Public Procurement Act 2003 (Act 663) s 35.

[27] Public Procurement Act 2003 (Act 663) s93(1)

[28] The Fourth Estate. (2026, March). Disregard for President’s vow for prudence: Ministry awards 81 sole-sourced contracts worth over GHS73 billion in 7 months. The Fourth Estate. https://thefourthestategh.com/2026/03/disregard-for-presidents-vow-for-prudence-ministry-awards-81-sole-sourced-contracts-worth-over-ghs73-billion-in-7-months/

BY; ADRIANA ELLEN BLANKSON Esq.

Nartey Law Firm is a leading corporate and commercial law firm in Ghana providing legal services to individuals, domestic and international businesses. Ensuring the success of our clients’ objectives is at the core of what we do. Comprised of a dedicated team of lawyers with extensive experience in corporate, commercial and international law and litigation, we pride ourselves with the diligent execution of all client matters, whilst guaranteeing an uncompromising standard with respect to excellence in service delivery. Some of our focus areas are Real Estate, Intellectual Property, Energy, Trade and Commerce, Banking and Finance, Regulatory Advisory, Capital Markets and Mergers and Acquisitions.

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April 14, 2026 Nartey Law Firm No Comments

MOBILE MONEY DISPUTES AND CONSUMER RIGHTS IN GHANA

INTRODUCTION

Financial inclusion ensures that individuals and businesses have access to useful, affordable, and sustainable financial products through the responsible delivery of transactions, payments, savings, credit, and insurance. Such inclusion is crucial for reducing poverty, fostering economic growth, and empowering underserved populations in managing financial risks and securing their future. According to the World Bank’s Consultative Group to Assist the Poor (CGAP), only 58 percent of Ghana’s adult population had access to formal financial services in 2015.[1] In this survey, access to formal financial services in Ghana increased significantly from 41 percent to 58 percent between 2010 and 2015, yet 42 percent of the population still lacks access to financial services. Certain groups including the poorest regions (Upper West, Northern, Volta, Upper East, and Brong Ahafo), rural residents, women, the poorest quantile of the population, and youth have even less access than their counterparts. The study showed how underserved the estimated 42 percent of the population were within the financial sector hence the need for innovative financial products like the digital and mobile money services. Mobile money services bridge the gap between the undeserved people and the financial sector as they are easily accessible even in rural communities. The increase in access to financial services is expected to create economic opportunities and contribute to poverty reduction.[2]

The Ghanaian mobile money landscape began with MTN in 2009. Subsequent entries included Zain’s Zap service in 2010 and Vodafone Cash in 2015; these providers have since been rebranded as AT and Telecel, respectively. This created a significant shift in the financial sector as people who previously could not have accessed financial systems through traditional means could now participate through access to the mobile money system. New findings from the 2025 KPMG West Africa Banking Industry Customer Experience Survey show that ATM usage fell sharply to 16 percent in 2025, down from 32 percent in 2023, underscoring a decisive shift in how Ghanaians access and move money. [3] At the same time, mobile money usage surged to 80 percent in 2025, the highest level recorded since 2022 and a seven-percentage-point increase from the previous year.[4] The data confirms what banks, telcos and fintechs have observed for some time: convenience, speed and reliability now matter more to customers than physical access to cash.

As with everything in our daily lives, the mobile money system has it pros and cons. The introduction of the mobile money system has seen some positive development in the financial sector and the top three of those would be;

Increased Financial Inclusion

Mobile money has extended financial services to previously underserved populations, especially rural residents and low-income earners. Individuals no longer need a traditional bank account to participate in financial transactions. With just a mobile phone and a registered SIM card, users can access financial services anytime and anywhere.

Convenience and Accessibility

Mobile money eliminates the need to travel long distances to banks or ATMs. Users can transfer funds, pay bills, purchase airtime, and receive payments within minutes. This convenience saves time, reduces transportation costs, and enhances economic productivity.

Economic Empowerment

Small businesses, market traders, and informal sector workers benefit greatly from mobile money services. It facilitates faster transactions, improves cash flow management, and reduces the risks associated with carrying large sums of cash. Mobile money has also enabled the growth of digital commerce and financial innovation in Ghana.

Despite its numerous benefits, mobile money has also given rise to disputes and consumer protection concerns. Common mobile money disputes in Ghana include:

Unauthorized transactions
Fraud and mobile money scams
Erroneous transfers (sending money to the wrong number)
Delays in transaction reversals
Agent misconduct
SIM swap fraud

Fraud, in particular, has become a significant issue. Cybercriminals use tactics such as impersonation, phishing, and fake promotions to deceive unsuspecting customers. Many users, especially those with limited digital literacy, are vulnerable to such schemes.

Recent news reports, including an incident from Wenchi reported by the Citi Newsroom, [5] show the seeming prevalence of fraudulent activity in the mobile money space. In the Wenchi case, the Wenchi District Court was reported to have remanded five individuals suspected of engaging in a coordinated mobile money fraud scheme involving conspiracy to commit crime and defrauding by false pretense. The accused persons allegedly defrauded a victim of approximately GH¢130,000 through deceptive tactics commonly associated with mobile money scams, including falsely claiming that funds had been mistakenly transferred and persuading the victim to reverse the transaction. Investigations revealed that the suspects operated as part of a syndicate targeting unsuspecting individuals across multiple locations in Ghana and had allegedly been engaged in similar fraudulent activities over an extended period.

The court remanded the accused persons to assist with ongoing investigations, with proceedings adjourned to allow for further inquiry. This case highlights the increasing sophistication of mobile money fraud schemes and underscores the need for stronger consumer protection mechanisms, improved public awareness, and more efficient dispute resolution processes within Ghana’s digital financial ecosystem.

Erroneous transfers are another frequent problem. Once funds are sent to the wrong number, recovering them can be difficult, especially if the recipient withdraws the funds immediately or if the sender used a payment system abroad. These disputes often leave consumers financially and emotionally distressed, raising important questions about accountability and consumer rights.

THE LEGAL AND REGULATORY FRAMEWORK GOVERNING MOBILE MONEY

Mobile money services in Ghana operate under a structured regulatory regime led by the Bank of Ghana. The two principal statutes governing mobile money disputes and consumer protection are:

Payment Systems and Services Act, 2019
Electronic Transactions Act, 2008

Other relevant legal instruments include data protection regulations and Bank of Ghana directives on consumer recourse mechanisms.

The Payment Systems and Services Act, 2019 (Act 987)

The Payment Systems and Services Act (Act 987) provides the primary legal framework for electronic money issuers and payment service providers in Ghana. The Act stipulates the oversight and regulatory regime covering digital money services primarily through licensing with regulatory control given to the Bank of Ghana.

Act 987 requires all electronic money issuers (EMIs) to obtain licensing and operate under the supervision of the Bank of Ghana. This ensures:

Financial soundness of providers
Operational risk management
Safeguarding of customer funds
Compliance with anti-money laundering standards

The Act strengthens consumer protection by imposing prudential and operational standards on mobile money providers. The Act also mandates that electronic money float be held in trust accounts with partner banks. This protects customers in the event of insolvency of the service provider. Funds are segregated from the provider’s operational accounts, thereby reducing systemic risk. This provision is crucial in dispute contexts where consumers question the security of their stored value.[6]

The Act requires payment service providers to establish internal dispute resolution mechanisms. [7]Consumers must be given accessible complaint channels, and providers are required to respond within stipulated timelines. If internal mechanisms fail, consumers may escalate complaints to the Bank of Ghana. This layered dispute resolution model strengthens accountability. However, practical enforcement remains inconsistent, particularly in rural areas where consumers may lack awareness of escalation procedures.

THE ELECTRONIC TRANSACTIONS ACT, 2008 (ACT 772)

The Electronic Transactions Act establishes the legal validity of electronic communications and transactions in Ghana. It provides a foundational basis for the use of electronic transactions as legal alternative for traditional modes of transacting.

Legal Recognition of Electronic Transactions

Section 5 of the Act 772 gives legal effect to electronic records, signatures, and communications. This means mobile money transactions are legally enforceable and admissible in court. In dispute resolution, transaction records, SMS confirmations, and electronic logs can serve as evidence.[8]

Liability for Unauthorized Transactions

The Act also addresses issues relating to unauthorized access and cybercrime. It criminalizes hacking, identity theft, and fraudulent electronic communications. Where fraud occurs through unauthorized system intrusion, the perpetrator may face criminal liability. However, the Act does not always clearly allocate civil liability between service providers and consumers in cases involving negligence (e.g., where a consumer unknowingly shares a PIN). This creates ambiguity in cases of SIM swap fraud or social engineering scams.

Protection Against Electronic Fraud

Section 122 of the Act 772 criminalizes electronic fraud and imposes penalties for cyber-related financial crimes. While this strengthens deterrence, enforcement challenges persist due to:

Limited digital forensic capacity
Cross-border fraud networks
Delays in prosecution

Thus, while the Act provides criminal remedies, victims often struggle to recover lost funds.[9]

GAPS WITHIN EXISTING LEGAL FRAMEWORK

Despite the protections provided by these two statutes, several gaps remain in addressing mobile money disputes and consumer protection in Ghana. Some of these gaps are;

Lack of Clear Liability Allocation

Neither Act clearly defines how liability should be allocated between mobile money providers, telecommunications operators, agents, and consumers in cases of unauthorized transactions or fraud. This lack of clarity can create uncertainty during dispute resolution and may result in inconsistent outcomes. Maybe the Bank of Ghana determines liability per case basis but a definition to guide who is liable with some case examples will make it easier to work with.

Weak Regulation of Erroneous Transfers

Mistaken transfers remain one of the most common mobile money disputes in Ghana. While service providers attempt to reverse such transactions, the legal framework does not establish mandatory timelines or procedures for transaction reversals. In instances where the transfer was from a payment platform abroad, the sender risks losing their money especially when the payment platform cannot facilitate a reversal.

Limited Consumer Awareness Measures

Both Acts focus primarily on regulatory oversight and legal enforcement but provide limited provisions requiring service providers to educate consumers about fraud risks and safe digital financial practices.

Weak Dispute Resolution Mechanisms

Currently, consumers must rely on internal complaint mechanisms provided by service providers or escalate disputes to the Bank of Ghana. There is no specialized institution dedicated to resolving digital financial disputes.

COMPARATIVE ANALYSIS WITH THE KENYAN M-PESA

A useful comparative perspective can be drawn from Kenya, which has developed one of the most sophisticated mobile money regulatory frameworks in Africa, largely driven by the widespread adoption of M-Pesa. In Kenya, mobile money services are principally regulated and overseen by the Central Bank of Kenya.[10] In contrast to Ghana’s dual statutory framework comprising the Payment Systems and Services Act, 2019 and the Electronic Transactions Act, 2008, Kenya’s regulatory approach is supported by more detailed operational guidelines governing mobile money services. These procedures were adopted by Safaricom, the network responsible for M-Pesa. These guidelines provide clearer direction on issues such as agent regulation, transaction reversal procedures, and the handling of consumer complaints. [11]While Ghana’s regulatory framework particularly following the enactment of Act 987 has significantly strengthened oversight of payment systems, further reforms may be necessary to address persistent consumer protection challenges.

SUGGESTED REFORMS WITHIN THE LEGISLATION TO AID WITH MOBILE MONEY DISPUTES

The legislation should introduce a clear liability framework specifying the circumstances under which service providers, agents, or consumers bear responsibility for financial losses. The Bank of Ghana can adopt the approach of Central Bank of Kenya and allow service providers to create guidelines which are in alignment with the laws that govern payment platforms consumption and also takes into account allocation of liability in some instances.[12] In the current acts, there is no allocated liability in the face of financial loss, which doesn’t serve a consumer well. Secondly, the law should require payment service providers to implement standardized reversal procedures and time limits for addressing erroneous transfers especially cases where the transfer was made from a payment system abroad.

There should be a reversal procedure that doesn’t involve the sender visiting the company regardless of where the transfer was initiated from. Additionally, there should be mandatory consumer education programs should be incorporated into the regulatory framework to improve digital financial literacy and reduce fraud. And the establishment of an independent financial ombudsman for digital financial services could provide faster and more accessible dispute resolution mechanisms.

CONCLUSION

The Payment Systems and Services Act, 2019 and the Electronic Transactions Act, 2008 collectively form the foundation of Ghana’s legal framework governing mobile money services and electronic financial transactions. These laws provide important safeguards, including regulatory oversight, protection of customer funds, legal recognition of electronic transactions, and criminal sanctions against electronic fraud. However, the rapid expansion of mobile money services has exposed gaps in the legal framework, particularly in relation to liability allocation, erroneous transfer procedures, consumer awareness, and dispute resolution mechanisms. Addressing these weaknesses through targeted legislative reforms and stronger regulatory enforcement will be essential to ensuring effective consumer protection and maintaining public confidence in Ghana’s digital financial ecosystem.

[1] Ministry of Finance (Ghana), National Financial Inclusion and Development Strategy (NFIDS) 2018–2023 (Ministry of Finance) https://mofep.gov.gh/sites/default/files/acts/NFIDs_Report.pdf accessed 19 February 202

[2] Ibid

[3] KPMG, West Africa Banking Industry Customer Experience Survey 2025: Competing for the Customer – Beyond the Basics in an AI-Shaped Financial Landscape (KPMG 2025) Accessible from: https://assets.kpmg.com/content/dam/kpmg/ng/pdf/2025/12/2025%20KPMG%20West%20Africa%20Banking%20Industry%20CX%20Survey%20Report.pdf at p. 32, Accessed Friday the 23^rd February 2026.

[4] Ibid

[5] Court remands five over alleged mobile money fraud in Wenchi’ Citi Newsroom (23 January 2026) https://citinewsroom.com/2026/01/court-remands-five-over-alleged-mobile-money-fraud-in-wenchi/ accessed 30 March 2026

[6] Section 37, Act 987.

[7] Ibid, Section 47

[8] See the case of Kate Bimpong v. Pastor Sampson Joe Baning Head Pastor Living Testimonies for Living Jesus Bible Ministry (2016) JELR 107102 (HC)

[9] Electronic Transactions Act 2008 (Act 772) https://nita.gov.gh/wp-content/uploads/2017/12/Electronic-Transactions-Act-772.pdf accessed 5 March 2026.

[10] Wanjau, ‘Trade in Services: Challenges and Opportunities for Developing Countries’ (World Trade Organization Workshop, June 2013) https://www.wto.org/english/tratop_e/serv_e/wkshop_june13_e/wanjau_e.pdf accessed 5 March 2026.

[11] Safaricom PLC, M-PESA Customer Terms and Conditions (Safaricom 2024) https://www.safaricom.co.ke/images/Downloads/M-PESA-Customer-Terms-Conditions.pdf accessed 10 April 2026

[12] Safaricom PLC, M-PESA Customer Terms and Conditions (Safaricom 2024) https://www.safaricom.co.ke/images/Downloads/M-PESA-Customer-Terms-Conditions.pdf accessed 10 April 2026

BY; Priscilla Mbama Yakubu

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