Vice Chancellor of the Methodist University of Ghana, Professor William Baah-Boateng, has warned that the growing dominance of fintech companies in remittance services is contributing to the depreciation of the Ghana cedi.
The economist explained that the shift from traditional banking channels to fintech platforms has altered foreign currency inflows, intensifying pressure on the exchange rate.
Prof. Baah-Boateng recalled that in the past, remittances sent through money transfer services like Western Union were channelled via local banks such as the Agricultural Development Bank (ADB).
These banks held dollar reserves with partner institutions abroad, helping manage foreign exchange supply more effectively.
“In the past, money transfers were done through Western Union. So, if it were through ADB, the bank would have its partner bank out there.
When the money was transferred and the dollar was with them, it was as though ADB had the bank,” he explained.
By contrast, fintech firms now auction foreign currency proceeds to the highest-bidding local banks rather than allowing reserves to build.
“When the money goes to them, they come and auction it to the banks. So, the one who gives them a higher rate, they give it to that bank, which then pushes the exchange rate up,” he added.
His comments reinforce concerns raised by former President John Dramani Mahama on September 10, who also linked cedi instability to evolving money transfer systems.
Both figures argue that unchecked fintech dominance in remittance flows risks undermining Ghana’s currency stability.
Prof. Baah-Boateng emphasised the need for deliberate policy interventions to ensure remittance inflows strengthen, rather than weaken, the cedi.
He noted that addressing this structural shift will be key to safeguarding exchange rate stability and ensuring remittances fulfil their role in supporting the economy.
