Ayodeji Ayenuwa
In response to regulatory measures by Ghana’s Central Bank, LemFi, a remittance startup focusing on immigrants’ banking services in Africa, has decided to suspend its operations in Ghana.
The suspension directly affects the ability to transfer money to banks and mobile money services within the country.
The Central Bank’s notice, issued on November 16, 2023, identified LemFi as one of eight entities prohibited from providing remittance services without obtaining regulatory approval.
The regulatory constraints are rooted in Ghana’s Foreign Exchange Act, 2006, which strictly prohibits foreign exchange dealings without proper licensing, as outlined in Section 29.1 of the Act. The penalties for operating without a license include fines or imprisonment.
LemFi, established in 2020, offers multi-currency accounts and facilitates international transfers across more than 20 countries for the African diaspora. The startup secured a substantial $33 million Series A funding round in August 2023, led by Left Lane Capital.
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“This change will bring about some inconvenience, and we sincerely apologize. If anything changes in the future, you will be the first to know,” LemFi expressed in a statement posted on its X account, emphasizing its users’ significance and promising immediate updates if there are any changes.
The decision aligns with a broader regulatory crackdown on money transfer firms in Ghana, significantly impacting their operational capabilities. This suspension raises concerns about its repercussions on immigrants and the local economy, disrupting remittance services vital for many African countries.
According to World Bank data, remittance inflows to Sub-Saharan Africa reached an estimated USD 53 billion in 2022, reflecting moderate growth compared to previous years.
Ghana’s Central Bank had previously warned against engaging in financial dealings with unapproved remittance providers, including LemFi, citing the Foreign Exchange Act. This legislation allows for fines and imprisonment as consequences for non-compliance.
Although LemFi’s initiation date in Ghana remains unclear, activities such as naming a brand ambassador and hiring a country manager in January 2023 suggest a pre-existing presence.
LemFi intends to engage with Ghanaian regulators, following a strategy similar to its approach in Nigeria, where it successfully obtained an International Money Transfer License.
Techrectory with Agency Report.
