LemFi, a remittance company, has ceased operations in Ghana. On Tuesday afternoon, the firm announced this in a statement.
“We regret to inform you that we are suspending all services to Ghana. As a result, you will be unable to send money to banks and mobile money,” a segment of the statement read.
Prior to this occurrence, the Bank of Ghana issued a list of unapproved money transfer organizations, which included Lemfi, on Thursday, November 16, 2023. The apex bank issued a statement warning Ghanaians and financial institutions to halt all transactions with the impacted entities. Failure to comply, it warned, will result in serious penalties, including license revocation.
In reference to Section 3.1 of the Foreign Exchange Act, 2006, the Bank of Ghana argued that no entity was authorized to conduct foreign exchange operations unless a license was given under the Act.
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Facilitators of LemFi’s growth
LemFi, which was founded in 2020 by former OPay personnel, provides remittance services to Africans in the diaspora. Users can keep, transmit, and receive money in at least two currencies: their host country’s and their own country’s.
Y Combinator, Microtraction, and Ventures Platform have all invested in the three-year-old firm. It announced a $33 million Series A in August 2023, which it aims to utilize to fund an expansion effort.
In addition, the business obtained an International Money Transfer Licence (IMTO) in Nigeria, which allows it to handle remittances to Nigerian bank accounts without the use of an intermediary. Rightcard Payment Services, a UK-based fintech, was also bought. The acquisition enables it to provide greater protection for consumer monies while allowing for larger transactions.
It is unknown when the firm began operations in Ghana or the scope of its operations. However, according to this blog post, it began allowing transfers to Ghana in January 2023. This development serves as yet another reminder of the ongoing conflict in Africa between regulators and innovators.
Ghana previously banned LemFi, others
In November 2023, he Central Bank Ghana issued a warning to the general public, commercial banks, specialized electronic money issuers (DEMI), and enhanced payments service providers (EPSP) regarding doing business with LemFi, Wise, Transfer Go, PayPal’s Xoom, SendValu, Boss Revolution, Aza Finance, and Supersonicz.
Section 3.1 of Ghana’s Foreign Exchange Act, 2006 (Act 723) makes it illegal to deal in foreign currency without a license. Operating without a license is punishable by a fine of “not more than seven hundred penalty units or a term of imprisonment of not more than eighteen months, or both,” according to Section 29.1 of the Act.
“Approved MTOs are hereby reminded to terminate their foreign exchange flows through their partner institutions only and to adhere strictly to all guidelines in respect of their operations,” the notice from Ghana’s Central Bank stated.
Remittances are a major source of foreign cash for many African countries. According to World Bank data, remittance inflows to Sub-Saharan Africa are expected to increase by 5.2% to $53 billion in 2022, up from 16.4% the previous year.