Ghana To Offer $2.6m Worth Of Grants To Companies Developing Innovative Remittance Products
The Remittance market in Africa may be crowded, but that is not stopping the Ghanaian government attempting to inject fresh impetus into early stage companies developing disruptive payments solutions.
In collaboration with the Swiss government, Ghana has launched the Remittance Grant facility (RGF), which will provide up to $2.6m of financial assistance to companies developing low cost remittance solutions.
The funding for this pilot phase of the project will be supplied via the Swiss government’s State Secretariat for Economic Affairs who run a development co-operation programme to help promote Ghana’s “inclusive and resilient economic development.” Ghana’s Ministry of Finance will provide counterpart support.
The financing facility will operate as a Challenge Fund, a “competitive financing facility to fund innovative ideas”, reports Ghana Business News.
Initially, grants of between $20-250,000 dollars will be provided to co-fund successful applicants – who have between the 5th May to 26th May to submit their applications.
Eligible operators, for example banks, non-financial institutions, money transfer operators, mobile network operators and other commercial, licensed entities are all eligible, provided they are developing products or services on remittances to meet the objectives of the scheme.
The funding is anticipated to support companies that can help to extend the scope of remittance services to deprived rural areas, and benefit Ghanaians in the Diaspora, as well as remittance backed financial products e.g. deposits and savings accounts, insurance, and investment vehicles – with the ultimate aim of increasing financial inclusion across Ghana.
The project was inaugurated by Ghana’s Finance Minister Mr Ken Ofori-Atta, to address “operational constraints associated with remittance flow channels into the country, as well as encouraging innovative product and service development.
Besides the Ghanaian and Swiss governments, KPMG International Development Advisory Services will act as Fund Manager of the RGF, with responsibility for setting the scheme up and taking responsibility for day to day operations.
The Bank of Ghana and Oxford Policy Management are also supporting the project, which will end in 2020, and if it has proved successful, launch a second phase that will continue into 2024.
The Charge D’Affairs at the Swiss Embassy, Mr Roland Fischer, commented:
“While we at SECO consider it not the role of the Government or a development partner to directly establish remittance channels and provide services, the RGF aims at crowding in the private sector to come up with innovative solutions.”
Applicants can download the entrance form here.
The Money Cloud View
London is not the only place where Fintech is exploding. Many African countries depend heavily on remittance flows – in 2010, 31 million African migrants sent more than $40 billion back to Africa – 2.6% of the continent’s GDP.
Ghana itself receives close to $1 billion of remittances each year, according to World Bank data. As we know, traditional remittance channels such as Western Union charge hefty fees and offer poor exchange rates.
It’s no wonder the Ghanaian government are willing to fund alternative, disruptive ideas. But these startups will have to be quick – disruptors are already grabbing market share and the trend will, surely, only increase in this fragmented, ultra-competitive market.
