Remittances potential untapped, as sector contributes over US$4.6bn yearly

The government has been urged to prioritise strategies to attract higher remittance inflows to support the country’s developmental agenda, shifting focus from an over-reliance on foreign direct investments (FDIs).

Currently, the country’s regulatory space presents hurdles to new entrance compared to neighbouring countries, such as Nigeria, which offer a more friendlier environment.

In 2023, remittances brought in US$4.6billion, according to the World Bank – significantly dwarfing the US$649million generated from FDIs during the same period. This highlights the country’s disproportionate focus on FDIs despite the far greater contributions of remittances.

“What remittances do for Ghana is far higher than FDIs. And as a country, we should take remittances seriously and encourage it because I think it will continue to outshine FDIs,” Director of Taptap Send Africa, a global money transfer company, Mawutor Abraham, said.

He explained that while attracting FDIs involves significant stress and expenditure, remittances are a low-hanging fruit that the country can leverage to support its development.

Mr. Abraham, who spoke at a media engagement in Accra, added: “For FDIs, we need to convince countries to come and invest; but with remittances, all we are doing is to convince our own people who are abroad to send in more money”.

He stated that the remittance sector could play a much greater role in supporting the economy if the government prioritised creating a more favourable environment to attract more remittance firms into the country.

On how to go about this, he advised the state to provide supportive domestic regulatory environment with clear guidelines for start-ups, review the four-year requirements for remittance firms wanting to set-up in the country, and promote closer engagement between players and regulators.

Explaining further, he said the Bank of Ghana (BoG) and other regulators must engage remittance firms and other stakeholders on ways to encourage more remittances into the country.

“The same way we hold fora to attracting FDIs and investments, we should have similar fora for encouraging remittances. But we are not doing that; we are kind of leaving remittances to fester on its own.

“We need to ensure that remittance companies are happy. If a company is able to pool US$1billion into the economy, we must provide it with a red carpet,” he noted.

Service resumption

The media engagement was to provide updates on the return of Taptap Send in the Ghanaian market after a month suspension due to regulatory breaches.

The resumption of service means that customers in the United Kingdom (UK), Europe, Canada, the United States and the United Arab Emirates (UAE) can once again send money seamlessly to their loved ones in Ghana.

The temporary suspension was due to a directive from the Bank of Ghana (BoG), which required Taptap Send to pause partnerships with local banks and Fintechs for one month concerning its newly-launched wallet product for European Union (EU)/ United Kingdom customers.

Mr. Abraham stated that while no laws were breached, Taptap Send respected the regulatory process and now confirms that its operations and regulatory status remain intact.

“We are fully committed to complying with all relevant regulations and we’re excited to resume transfers to Ghana for the thousands of customers who have relied on us for their money transfers over the years,” he said.

Impact

Mr. Abraham stated that Taptap Send suffered a significant loss, exceeding US$100million in transactional value during the month of November, following the suspension of its operations in the country.

He explained that the suspension had a devastating impact on the company’s revenue in November, resulting in zero transactions for the entire period.

“Taptap Send processes about US$100m in money transfers monthly; and so for the month of November, we recorded zero money transfers due to the suspension, and that also affected our revenue for November. We also lost some customers who we are now trying to get back,” Mr. Abraham concluded.