BoG Rebuts Claims of $8bn Loss Through Remittances

The Bank of Ghana (BoG) has refuted claims suggesting that the country has lost $8 billion in the past two years due to Money Transfer Operators (MTOs) and FinTech companies withholding inward remittances, thereby impacting the nation’s foreign currency reserves.

The reports, allege that the decline in Ghana’s inward remittances has been substantiated by BoG, asserting that newly licensed MTOs and 11 FinTech companies held back approximately GH¢18 billion (US$3 billion) in 2022 and GH¢57 billion (US$5 billion) in 2023.

Contrary to these allegations, the Bank of Ghana has clarified that remittance inflows have shown a consistent year-on-year increase, corroborated by data from both the BoG and the World Bank.

The BoG further emphasized that it does not license MTOs, as these entities are based abroad. Instead, the BoG performs due diligence on MTOs partnering with local banks and FinTech companies to facilitate remittances into Ghana as part of its authorization process.

Remittance Inflows

Moreover, BoG explained the procedural aspect of remittance inflows, stating that all such funds are credited to the nostro accounts of partner banks associated with Payment Service Providers (PSPs). Consequently, no PSP holds any foreign exchange inflows from inward remittances.

Instead, partner banks credit the local cedi accounts of PSPs, which are then transferred to beneficiaries. Based on this framework, the assertion that $8 billion has been lost over the past two years due to the withholding of remittances is misleading and unsubstantiated by factual evidence.

Further scrutiny of these claims led to inquiries from the public regarding the operation of two separate foreign exchange systems in Ghana. This includes the 23 authorized dealer banks accounting for all foreign exchange received from inward remittances while the “newly licensed” MTOs and FinTech companies purportedly do not account for all foreign exchange receipts under the Foreign Exchange Act, 2006 (Act 723).

In its response, BoG clarified that it has never licensed any MTOs and reaffirmed that Ghana does not operate two distinct foreign exchange systems. Both banks and FinTech companies involved in inward remittance services are required to submit regular prudential returns to the Bank of Ghana as part of their regulatory obligations. This compliance ensures that all entities adhere to the Foreign Exchange Act, 2006 (Act 723) and other pertinent legal and regulatory frameworks.

The BoG’s detailed rebuttal aims to dispel any misconceptions regarding the handling of inward remittances and the integrity of the country’s foreign exchange system. By providing transparency on the regulatory processes and the actual flow of remittance funds, the BoG seeks to reassure the public and stakeholders of the robustness of Ghana’s financial systems and the proper management of its foreign currency reserves.

Meanwhile, pursuant to Section 4 (1) (e) of the Bank of Ghana Act 2002, (Act 612) as amended, Section 2 (3) of the Foreign Exchange Act, 2006 (Act 723) and Section 101(2) (i) of the Payment Systems and Services Act 2019(Act 987), the Bank issued Updated Inward Remittance Guidelines in November 2023, providing a framework for Payment Service Providers (PSPs), otherwise known as FinTechs, to partner with Money Transfer Operators (MTOs) and local banks for termination of inward remittance.

These Guidelines complement the role of banks in offering remittance services and provide alternative channels, such as mobile money wallets for receipt of inward remittance by Ghanaians. It is important to note that these authorisations for PSPs are restricted to inward remittance services only, without any involvement in outbound remittance services.

Additionally, the Inward Remittance Guidelines mandate FinTechs to work with partner local banks. FinTechs have no authority whatsoever to hold remittance proceeds outside of the banking system.

This clarification from the BoG underscores its commitment to maintaining a transparent and well-regulated financial environment, essential for the stability and growth of the country’s economy. It also highlights the importance of accurate information dissemination to prevent unwarranted panic or misconceptions about critical economic issues such as remittances and foreign exchange management.