Ghana’s Remittance Riddle: Where Did $10.6bn Go?
- Bank of Ghana’s Audit Aims to Solve a Multi-Billion Dollar Mystery
As Ghana struggles to stabilize its shaky macroeconomic landscape, one pressing question lingers: why does the country desperately seek a $3 billion bailout from the International Monetary Fund (IMF) under tight fiscal conditions when billions in remittance inflows remain unaccounted for?
In 2023, Ghana reached a staff-level agreement with the IMF, securing a $3 billion Extended Credit Facility (ECF) aimed at restoring debt sustainability, boosting forex reserves, and stabilizing the cedi. Yet, while the country grapples with painful austerity measures, stringent tax hikes, and a restrictive spending framework, evidence suggests that a far larger sum allegedly may be sitting offshore, untouched and unmonitored, as remittance inflows.
But Ghana is at the centre of a growing financial storm. In a world where remittances outpace foreign direct investment (FDI) as a key economic pillar, a disturbing question is emerging: where is Ghana’s alleged missing $10.6bn billion in remittance inflows?
Ghana’s IMF Dilemma: Borrowing While Bleeding Forex?
The IMF’s bailout comes with tough conditionalities:
- Fiscal consolidation, requiring heavy taxation and spending cuts.
- Debt restructuring, pushing the country to negotiate with creditors.
- Strict forex management, ensuring reserves remain above critical levels.
Yet, while the government taxes citizens heavily, cuts social spending, and struggles to maintain forex reserves, billions in remittance forex remain outside the banking system, allegedly externalised by Fintech firms and Money Transfer Operators (MTOs).
The contradiction is striking: if even half of the missing $10.6 billion had flowed through Ghana’s formal banking sector, the country may never have needed an IMF programme in the first place.
The IMF’s Missing Factor: Why Is the $10.6bn Not Part of the Rescue Plan?
The IMF’s programme assumes that Ghana is cash-strapped, but is this entirely true? If foreign exchange is being illegally held offshore, shouldn’t the government focus on reclaiming this money instead of borrowing more?
Dr Richmond Atuahene, a Banking and Financial expert, believes that a serious forensic audit into Fintech firms could bring a significant portion of this alleged $10.6 billion back into Ghana’s reserves. From where we sit as NorvanReports we believe this could:
- Reduce Ghana’s dependence on the IMF, limiting the need for external borrowing.
- Boost forex reserves, stabilizing the cedi without the need for emergency inflows.
- Allow for lower taxes, since domestic revenue would be bolstered by forex earnings.
The Bigger Question: Who Benefits from the Forex Leak?
A closer look suggests that certain private players, the licensed Fintech firms and MTOs are alleged to be profiting from forex hoarding while the government struggles to meet IMF conditions. If these firms continue to hold Ghana’s forex abroad, ordinary citizens will bear the brunt of fiscal tightening while corporate entities freely manage billions outside the country’s financial system.
But the Bank of Ghana (BoG) has now taken an unprecedented step—launching a nationwide audit into remittance transactions covering the fourth quarter of 2024, from October 1 to December 31. The audit, which will scrutinize banks and remittance service providers, is aimed at unearthing irregularities, hidden forex flows, and potential externalization of funds by financial technology (Fintech) firms.
At the heart of the matter lies a glaring discrepancy: while the World Bank reported Ghana’s total remittance inflows at $4.7 billion in 2023, the BoG only recorded $2.8 billion. Over the last five years which began from 2019 and ended in 2023, the gap has ballooned to a staggering $10.6 billion.
Shadow Banking & The Fintech Conundrum
A scathing policy brief by Dr. Richmond Atuahene, a banking and financial expert, has ignited fresh scrutiny of Ghana’s financial sector. His analysis points to a regulatory blind spot—Fintech firms licensed under the Payment Services and Systems Act 2019 (Act 987), which he claims have been externalizing foreign exchange inflows, starving the formal banking system of much-needed forex liquidity.
The numbers are alarming. Between 2019 and 2023, Ghana officially received $11.30 billion in remittances, yet the World Bank’s data shows $21.90 billion for the same period. The difference is over $10 billion, which is potentially being held offshore by Fintech firms and Money Transfer Operators (MTOs).
Dr. Atuahene argues that these Fintech firms licensed by the BoG have been circumventing traditional banking channels, directing billions in remittances away from Ghana’s official forex reserves. Unlike Bangladesh or Sri Lanka, where over 90% of remittance flows pass through the banking system, Ghana’s weak regulatory framework has allowed massive forex leakages.
The result? A cedi in free fall, persistent forex shortages, and an economy grappling with artificial currency depreciation despite steady remittance inflows.
BoG’s High-Stakes Audit: A Test of Credibility
The Bank of Ghana has initiated a full-scale audit, reviewing compliance with:
- Foreign Exchange Act 2006 (Act 723)
- Payment Services Act 2019 (Act 987)
- Updated Guidelines for Remittances
- AML/CFT Regulations (Anti-Money Laundering/Combating the Financing of Terrorism)
“All market participants are reminded of their obligation to comply fully with these regulatory requirements,” the BoG stated in a February 19 notice, adding that transparency and compliance will strengthen the remittance ecosystem and curb AML/CFT risks.
For a nation where remittances reached $6.65 billion in 2024 more than three times the $1.73 billion in foreign direct investment (FDI)—this audit is more than just an exercise in regulatory oversight. It is a battle for Ghana’s financial integrity.
Yet, the central bank faces an uphill task. If Dr. Atuahene’s estimates hold true, then the audit must go beyond routine compliance checks and uncover the specific remittance flows that have been siphoned away from Ghana’s banking system.
Who Benefits From The Missing Billions?
In most economies, remittances strengthen exchange rates, boost national reserves, and fuel economic growth. But in Ghana, despite steady inflows, the cedi continues to depreciate.
Why? Dr. Atuahene believes that a vast share of remittances never actually enters the local financial system. Instead, Fintech companies reportedly hold foreign exchange in offshore nostro accounts, outside the regulatory reach of the BoG.
The evidence suggests that Fintech firms, instead of immediately settling remittances in Ghanaian cedis, keep forex reserves abroad, limiting supply to the local forex market. This practice, if confirmed, could explain why Ghana faces persistent forex shortages despite high remittance inflows.
The consequences are far-reaching:
- Artificial demand for foreign currency drives up exchange rates.
- The cedi depreciates, despite strong forex inflows.
- BoG’s forex reserves shrink, making it harder to stabilize the economy.
Lessons from Nigeria: A Cautionary Tale
Ghana’s predicament echoes Nigeria’s remittance crisis. In 2023, Nigeria was estimated to have received $20 billion in remittances, yet a shocking 90% of that ($18 billion) never made it into the country’s official banking system.
Instead, Fintech and mobile money operators held forex abroad, exacerbating currency devaluation, inflation, and balance of payment deficits.
Could Ghana be heading down the same path? If so, the BoG’s audit may be its last chance to reclaim billions in lost forex revenue.
The Path Forward: Regulation or Ruin?
Dr. Atuahene outlines several urgent policy recommendations to plug the remittance drain:
- Forensic Audit on Fintech Firms
- The government must commission external auditors to scrutinize Fintech companies and their nostro accounts.
- Mandatory Forex Settlement through BoG
- All remittances should be repatriated through BoG or licensed banks, preventing offshore hoarding.
- Real-Time Transaction Monitoring
- The BoG should implement digital tracking tools (APIs) to trace remittance flows in real-time.
- A Dedicated Remittance Oversight Unit
- The BoG should create a specialized department to monitor all remittance transactions, similar to Bangladesh’s central bank model.
- Prosecution for Forex Externalization
- Companies failing to repatriate forex should face severe penalties, including license revocation and criminal charges under the Foreign Exchange Act 2006 (Act 723).
Will the Audit Expose Ghana’s Largest Forex Leak?
The Bank of Ghana’s credibility is on the line. If the audit merely scratches the surface without holding firms accountable, Ghana risks joining the ranks of forex-starved economies crippled by opaque financial practices.
But if it delivers a comprehensive exposé, forcing Fintech firms to repatriate the missing billions, Ghana’s forex market could regain stability, resilience, and much-needed liquidity.
For now, the question remains: will the audit finally bring accountability to Ghana’s remittance ecosystem, or will the missing billions continue to slip away?
The answer could shape Ghana’s financial future for years to come.
Interesting indeed. Very interesting.
Digitization of the current system is a must
I am confused. Remittance involves 2 countries. All the money can’t sit in Ghana so what exactly are you trying to say? At the end of the day the Fintech settles their banking partner in Ghana whatever is owed them. Or do you expect them to move monies they have sitting in other countries like the US, UK, etc. to Ghana?