15 Aug 2024
For many Ghanaians living and working in Germany, the practice to send money to Ghana from Germany is a significant method to support loved ones back home. These remittances, as they're called, contribute significantly to Ghana's economic well-being. However, navigating the process of money transfers can sometimes become a significant challenge, with factors like fees and exchange rates impacting the recipient's amount.
With the increased stability of Ghana's financial systems, more favorable conditions create a basis for a better future for remittances from Germany. This article examines the recent reforms in Ghanaian policies and how they have improved their effectiveness, possibly reducing the cost of transferring money across the Atlantic to fellow countrymen in Germany.
Previously, sending money from Germany to Ghana could have been hindered by several factors. The money transfer industry in Ghana contracted a relatively small number of money transfer service providers, meaning limited competition, often resulting in less competitive exchange rates for transferring and fees for senders. This means that a lesser amount arrived at the target beneficiary out of the transferred amount.
Burdensome regulations and seemingly tiresome paperwork may take considerable time, which could delay the receipt of funds in Ghana. This can frustrate both senders and recipients, impacting financial transactions and planning.
Although most Ghanaians reside in rural regions, many individuals need access to the sort of regular banking services necessary to obtain electronic funds transfers. These factors could have disinclined Ghanaians in Germany from using the formal financial systems to remit funds back home and forced them to use the informal sector, which is risky.
It is appreciable that the Ghanaian government has made efforts to transform the remittance sector through which they have been influenced, directly benefiting the Ghanaians living abroad and their families. Take a closer look at the key reforms driving positive change:
Earlier, many people in Ghana, especially the rural populace, could not access conventional banking services, and therefore, they were financially excluded.
This was a challenge regarding delays in receiving the remittance through electronic means. Previously, such financial exclusion was the norm in Ghana, but the government’s recent effort to provide financial services is reversing this reality.
With accessible financial services, more Ghanaian citizens have been able to borrow through mobile wallets or Agent Banking networks. Suppose Emma only stays in a village, and due to this new technology, she receives a text message sent by her son Kwame, now in Germany, that the amount of money is ready for her in her mobile wallet.
This helps Kwame avoid having to think about how long it would take to transfer money through a bank or whether there is a higher likelihood of encountering additional fees when opting for cash pickup solutions. Emma, on the other hand, can easily liquidate the asset to meet needs, such as purchasing basic necessities or using the money to finance small ventures.
Various regulations made it very difficult for money transfer service providers to do business in Ghana, not to mention the bureaucracy associated with most of the required papers.
This constrained competition to the point of triggering high fees and mediocre foreign exchange rates for the sending corporations. However, the facilitation of measures and exercises has brought a new lease of life and innovation to the remittance ecosystem.
Therefore, competition has emerged in the market, thus offering the Ghanaian populace within the German realm, including Kofi, several lucid options for money transfer Services. This makes it possible for Kofi to bargain for the charges in fees and exchange rates and the duration taken to transfer money to opt for the most efficient channel to send money back to his family.
This is particularly the case with Ghana, where the government is wisely recognizing the potential of the fintech industry to drive innovation in money transfers. Technology enables processing services related to financial sectors, and within the remittance field, fintech enhances how Ghanaians navigate through money transfers.
Suppose there could be a mobile application where Kwame, for instance, could send money online to Ghana from Germany to Emma as quickly as through a few taps on a screen, thus ensuring that the money would go directly to Emma’s mobile wallet without any third-party interference.
This not only cuts the time taken to transfer money but also positively impacts the customer’s experience and may have a positive impact on cost compared to other forms of sending and receiving money.
The measures proposed by the Ghanaian government in this aspect can go a long way in helping those sweating it out in Germany and sending whatever little they earn back home to Ghana. Below is a breakdown of some key advantages, which include faster processing times, reduced fees, and improved financial security.
When competition between money transfer service providers is high, the sender bears the brunt in the sense that the fees incurred in the transfer will be low, and the exchange rates charged will be attractive. This means that more of the foreign currency Kwame sends from Germany finds its way into Emma’s pocket.
Even a single cedi counts for a lot. It can turn into a lifesaver for families, helping them pay for basic needs, healthcare, education, or small businesses.
The use of new technologies, notably those related to mobile money transfers and integrated agency models, can optimally reduce transfer time. Kwame has other accounts where he makes payments, and Emma doesn’t have to wait days or even weeks to receive the money.
This means that through faster transfers, families in Ghana can maintain quick monetary transactions, replacing the face-to-face mode of transferring funds with ease and supporting their everyday needs without necessarily being stretched financially.
These covered financial services as service provision expanded, and online money transfer from Germany to Ghana solutions enhanced the convenience of sending and receiving remittances. Kwame can summon transfers from his home in Germany using mobile money.
Also, the funds can be collected electronically, thus avoiding the long distances to the pick-up center. This simplification of the remittance system and making it easily accessible by those living in rural areas is surely a convenient factor.
While Ghana's policy reforms signify a positive step forward, there remains considerable room for improvement. Efforts should focus on enhancing implementation, addressing systemic challenges, and ensuring that the benefits of these reforms reach all segments of society, thereby fostering sustainable development and inclusive growth for the nation's future.
Additional attempts to encourage customers to be informed about the transparent remittance market may enhance consumers' ability to make informed decisions on the company to choose when sending money.
Improving the fintech sector's existing offerings should pave the way for further innovation, resulting in better efficiency of remittance services. This can lead to lower costs, faster transactions, and increased accessibility for users. Ultimately, this will benefit both the senders and recipients, boosting financial inclusion and economic stability.
There is a direct correlation between partnerships between Ghana and Germany as a key sending country, which may lead to the creation of new strategies aimed at enhancing the effectiveness of remittances on the two economies.
When put together, these reforms might indeed bring many changes in the lives of Ghanaians living and working in other countries and their back-home relatives. Money transfers and payments take less time, are more convenient, and, in the long run, can be cheaper, enhancing financial and economic well-being. This, in turn, contributes to the overall financial and economic growth of Ghana, fostering development and improving living standards for its citizens.
Ghana's policy reforms aimed at improving the remittance landscape hold significant promise for the Ghanaian diaspora in Germany. Increased competition, streamlined regulations, and adoption of new technologies can potentially lead to cheaper, faster, and more convenient money transfers from Germany to Ghana.
This, in turn, strengthens the financial well-being of families in Ghana and fuels the country's economic growth. As mentioned earlier, exploring online money transfer services like ACE Money Transfer can potentially offer competitive rates and lower fees, ensuring a more significant portion of your hard-earned money reaches your loved ones back home. With continued progress and collaboration, sending money to Ghana can become a seamless and rewarding experience for Ghanaians in Germany.
Remittances from Ghanaians living abroad, particularly in Germany, are a significant source of income for Ghana, contributing to the well-being of families and fueling economic growth.
Previously, limited competition among money transfer services often meant higher fees and less favorable exchange rates. Complex regulations and restricted access to financial services in rural Ghana also created hurdles.
Ghana's reforms focus on promoting financial inclusion, relaxing regulations, and embracing fintech. This can potentially lead to lower fees, faster transfers, and greater convenience for senders in Germany.
Reduced costs, faster transfers, and easier access to remittance services, especially in rural areas, are some potential benefits of Ghana's reforms for the Ghanaian diaspora in Germany.
Ghana's reforms and continued collaboration with Germany offer a promising future for smoother, potentially cheaper, and more efficient money transfers, benefiting both economies.
