Graphic Business has reported that more than half of the foreign remittances entering Ghana cannot be adequately accounted for, a problem stemming from the deregulation of the foreign remittances sector.
The introduction of fintech companies following the Payment Systems and Services Act of 2019 has had a negative impact on the stability of the local currency, according to Banking Consultant Dr. Richmond Atuahene. He stated that if all remittances were accurately tracked, they could have significantly bolstered the local currency.
In 2021, Ghana received $4.5 billion, and in 2022, it received $4.7 billion, according to a World Bank report. However, the Auditor-General’s Report on the Consolidated Statements of Foreign Exchange Receipts shows that remittances for those years amounted to $2.11 billion and $2.12 billion, respectively.
Dr. Atuahene emphasized that this reveals discrepancies in the country’s remittance data compared to the World Bank’s assessment. The World Bank tracks remittance figures from the source, suggesting that the Bank of Ghana (BoG) may not be monitoring all remittances.
He suggested that this situation could be a consequence of the sector’s deregulation, with fintech companies potentially not reporting their remittances to the BoG, which would be a clear violation of the Foreign Exchange Act.
“This may be due to the deregulation of the sector, with fintech companies potentially not declaring their remittances to the BoG, in violation of the Foreign Exchange Act.”
Concerns are raised by the disparities between the BoG’s balance of payments and the World Bank report, which show that over half of the remittances received in Ghana are not included in the latter’s figure.
“When you take the World Bank report and the BoG figures, you see some discrepancies between the two.
So it’s either we are not tracking all the remittances because it
seems more than half of the remittances that come into the country are not reflecting on the BoG’s balance of payment.”
“In 2019, we passed the Payment Systems and Services Act which was accompanied by a National Payment Strategic Plan which created the enabling environment for other private Money Transfer Companies (MTC) and Fintechs to play an active role in receiving remittances and it appears their activities are the reason why we are not capturing all the remittances.” he said.
Dr. Atuahene thinks that the volatility of the local currency is caused by fintech companies hoarding foreign currencies rather than turning them over to the BoG. Ensuring accurate monitoring of all remittances has the potential to greatly boost the nation’s economy.
“When you go into the Foreign Exchange Act, it states categorically that no institution can hold foreign currency except BoG or the authorised dealer banks but due to the introduction of these MTCs and fintechs, people are now sending their remittances through them and they end up holding on to the foreign currencies and don’t surrender
them to the BoG.”
“If all these funds were coming into the banking system, the banks would have used it in supporting payments of imports and BoG wouldn’t have to come in to sell forex to the Bulk Oil Distributing Companies (BDCs).”
“I worked as a foreign exchange dealer in a bank and we used to go to some of these MTCs and Fintechs for foreign currencies, which is a clear indication that they have been holding on to them,” he disclosed.
In order to find flaws and leaks, he also demanded a forensic audit of all remittances entering the nation.
Furthermore, he suggests that in order to ascertain whether remittances are a constant in Ghana’s balance of payments, the Ministry of Finance, the Ministry of Foreign Affairs and Regional Integration, and the Bank of Ghana should collaborate with development partners such as the World Bank.