Saved by the payangel – The state of remittances in Sub-Saharan Africa
Ghana is the second-largest remittances receiver in Sub-Saharan African after Nigeria with an economic reliance of USD 4,054 Million (Inflows), representing 6.1% of Ghana’s GDP (Bank of Ghana, 2019, World Bank 2019).
This is because of a large, well-dispersed diaspora and a thriving digital environment, creating opportunities to reduce costs and enhance financial inclusion.
Also, the average cost of sending money to Ghana stood at 6.4% in quarter 4 of 2020 and a resounding 58% of Ghanaian adults in 2017 have a formal account, including mobile money.
Even though World Bank predicted a sharp decline from 12.5% in 2020 to $42 billion in Sub-Saharan Africa, in the wake of the Covid-19 pandemic it only dipped by 0.5% in 2019 and has since demonstrated resilience with a 2.3% increase (World Bank Forecast, 2019).
One growing concern remains, sending money to Sub-Saharan Africa is the most expensive: sending $200 costs an average of 8.2% (World Bank). Currently, Ghana has a competitive operator market of 29 firms in the money transfer market sending to Sub-Sahara Africa, with 30 paying out operators (Remitscope Research, 2020).
The national financial inclusion strategy aims to increase account ownership from 58% to 85% by 2023. With the growth of digitization and a strong Fintech sector in Ghana.
This also means that, there is an opportunity to develop remittance related products for the diaspora to encourage savings and investments for the growth and development of the local economy and well-being of Ghanaians.
This requires remittance companies that will develop a competitive payment system to reduce the cost of sending money to Ghana, and eventually help to eliminate the cost of remittance transactions entirely. This presents one of the surest ways to grow the local economy.