Delivering remittances at the last mile

Delivering remittances at the last mile

12 May, 2022    
The role of enabling identity regulation in Ghana 

Recent data shows that remittances continue to play a critical role in Ghana. According to Ghana’s 2020 Remittance Market Diagnostic, remittances contributed 6.2% to the Ghanian GDP economy and supported the livelihoods of an estimated 600,000 households in 2020. Beyond domestic investment, Ghana’s current financial inclusion and development strategy acknowledges and highlights how remittances can drive uptake and usage of formal and digital financial services to receive funds. Remittances can also lead to the demand for mobile money services in order to receive funds into digital wallets.  

For financially excluded groups, access to a valid form of government-issued identity document is a key barrier to accessing remittances at the last mile. Considering the Ghanian government’s national policy goal of increasing formal financial inclusion from 58% of Ghana’s adult population to 85% by 2023 (Ghana Ministry of Finance, 2018), enabling financial services access for low income and rural people is key to achieving this. A key barrier to achieving this goal, however, is limited or lack of access to government issued identification documents among the adult population. For example, the World Bank estimates that 4% of individuals aged 18 years and older (or roughly 631,000 individuals) in Ghana still don’t have access to any form of valid government-issued identity document (World Bank, 2018)[1]. Such exclusion (due to identity and other factors) has the following key implications:  

  • At an individual level, the excluded people are left unable to access broader formal financial services such as savings and credit.  
  • At a business level, financial institutions lose out on a potential customer base, as individuals without stipulated proof of identity are turned away, which may affect their bottom line and business growth. 
  • As the number of excluded people (due to the lack of required proof of identity documents) grows at a national level, it introduces AML-CFT risks into the financial system as a result of an inability to track the volumes and values of financial transactions and who is conducting them, which undermines the integrity of the financial system and creates challenges for regulators on how to identify and manage these threats. 

To avoid these pitfalls, innovative approaches to regulatory compliance are needed to tackle identity challenges. In recognition of these unintended consequences from the identity gap, the Bank of Ghana (BoG), together with the Ghanaian Financial Intelligence Centre (FIC), proactively published the Anti-Money Laundering/Combating the Financing of Terrorism & the Proliferation of Weapons of Mass Destruction (AML/CTF&P) Guideline for Banks and Non-Bank Financial Institutions in 2018, with the explicit aim to boost inclusive financial integrity. Towards this, the 2018 guideline stipulates a provision (Section 2.54) that allows financial institutions to be more accommodative in their KYC and customer due diligence practices. This provision helps achieve this by allowing financial institutions to accept a letter or statement as proof of identity for individuals who don’t have any form of government-issued ID (or the Ghana Card primarily from 1st July 2022 as per the notice issued by the BoG in January 2022). This possibility (as enunciated in the 2018 guideline) is under the condition that the aforementioned individual come accompanied by a person who can confirm their identity as outlined in the letter or statement and who can present a valid form of government-issued ID[2]. As a result, financial institutions are able to provide financial services (including remittances) to a larger customer by serving individuals who ordinarily would have been turned away, thus providing opportunities to enhance & grow of their business. As more people are able to access formal financial services utilising this provision, financial institutions will be able to support the national policy goal of increasing formal financial inclusion from 58% of Ghana’s adult population to 85% by 2023. 

Despite the efforts by the BoG and FIC, industry hesitancy remains an obstacle in leveraging provided provisions in AML-CFT guidance. In Ghana, some industry players have shown hesitancy to act on regulatory guidance aimed at addressing last-mile constraints to remittance access. This hesitancy has been driven by three factors:  

  • Firstly, uncertainty exists regarding how the aforementioned provision can be utilised while still meeting regulator AML-CFT compliance requirements.  
  • Secondly, industry players are unsure how they will go about serving existing customers who are unable to meet the 1st July 2022 deadline to attain a Ghana card, which is set to become the sole proof of identity to access formal financial services in place of current multiple forms of government-issued IDs (such a driver’s licence, passport or voters ID card)  
  • Thirdly, financial institutions are unsure how to adapt risk assessment and management approaches under circumstances in which individuals do not possess a valid form of government- issued ID.  

These real and perceived hurdles by industry highlight the need for clarity and  coordination between private sector and the regulator to support innovation within the remittance space.  

Cenfri and IFAD are working to help support KYC and CDD innovations for enhanced remittance access. As part of IFAD and Cenfri’s two-year Remittance Access and Innovation (RAI) programme in Ghana, we are working with remittance service providers and regulators around KYC and CDD innovations to enhance remittance access to rural and low income households. This assistance is being provided in accordance with the existing regulatory framework in Ghana to support the inclusiveness of the remittance market.  Our work  in Ghana is to help put into practice the provision outlined in the AML-CFT guideline, taking into consideration the Ghana card directive[3], to better serve their customer bases. Ghana is a case study of a country where progressive and innovative regulation exists to address the identity gap and where there is an opportunity to tackle this challenge at both the system level (through the regulator) and market level (though financial institutions). To do so, however, proactive coordination and cooperation between the regulator and financial institutions are key to overcome regulatory uncertainty that hinders innovation towards promoting a formal inclusive remittance market and unlocking further opportunities to innovation in the financial market.

[1] Data from Ghana’s ECOWAS peers Senegal, Niger and Togo  shows that 2.1 million, 2 million and 660,000 of individuals ages 18 years and older respectively lack access to any form of valid government issued identity document. These countries were chosen for comparison given that they have the same age cut off (i.e age at which individuals can register for a national ID) as Ghana according to the World Bank’s Identification for Development database.

[2] This provision and the guideline will remain in force until 1 July 2022 and until such a point that a revision of the guideline document is released that will consider the new requirement for the sole use of the Ghana card for financial service transactions.

[3] The BoG has confirmed that it remains committed to consider flexibilities to ensure the new directive doesnt exclue people from financial system. 


The Remittance Access and Innovation programme forms part of IFAD’s Platform for Remittances, Investment and Migrants’ Entrepreneurship in Africa (PRIME Africa) initiative, co-financed by the European Union. We are working with RSPs in seven countries (The Gambia, Ghana, Kenya, Morocco, Senegal, South Africa and Uganda). For more information, contact Masiiwa Rusare 

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