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Youth Finance Advisor
Youth Finance and Empowerment Lead
Almost 1 million Ghanaians work as migrants in foreign countries. In 2019, Ghana received US$3.5 billion in remittances, about 5% of their Gross Domestic Product (GDP)
On this International Day of Family Remittances, the United Nations Capital Development Fund (UNCDF) is happy to announce the creation of two innovative partnerships to test crowdfunding platforms which will channel remittances into productive investments at the local level in Ghana.
The project, “Boosting Green Employment and Enterprise Opportunities in Ghana – (GrEEn)”, is a four-year action aimed at creating greater economic and employment opportunities for youth, women and returning migrants by promoting and supporting sustainable, green businesses in Ashanti and Western regions of Ghana. The project is implemented by UNCDF and SNV Netherlands Development Organization under the European Union Emergency Trust Fund (EUTF) for Africa.
Under this framework, UNCDF seeks to test and/or scale up innovative financial services to accelerate the process of asset accumulation and access to finance for the creation/expansion of economic opportunities for the beneficiaries. Crowdfunding and peer-to-peer lending platforms, in particular, offer alternative financing options for youth entrepreneurs’ access to seed capital now more than ever. With Ghana being the second largest recipient of remittances in Sub-Saharan Africa and with many young entrepreneurs looking to family and friends for start-up funds for their businesses, crowdfunding offers the possibility of pooling these funds in a formal structure and building a financial history which will allow Financial Service Providers (FSPs) to better engage these entrepreneurs. While sending money from abroad can be at prohibitive costs, crowdfunding represents a new innovative financing mechanism to channel remittances from diaspora to local MSMEs: families, friends and investors abroad can easily send funds through secured platforms to support local entrepreneurs and their daily activities and businesses.
To this end, UNCDF together with the European Union in Ghana is committed to make crowdfunding available for youth, women and returnees in Ashanti and Western. As such, through a competitive request for application, UNCDF has selected two partners active in the crowdfunding sector:
- Pezesha Africa Limited, a Kenyan organization that will bring its experience in revenue-shared crowdfunding model to Ghana;
- Strategic Impact Advisor, a firm with digital finance expertise partnering with a local tech provider and two hubs located in the targeted region that will scale up a crowdfunding platform and onboard local entrepreneurs by providing them with a full set of additional services (e.g. training, mentorship, financial education) to make sure that funds raised through the platform can be leveraged for additional access to financing from FSPs, looping the beneficiaries in the formal financial ecosystem.
Through such innovative partnerships, UNCDF is able to catalyze the growth of the financial inclusion sphere in Ghana by empowering populations, which have been left behind, to access innovative solutions that can help support their businesses and needs – particularly with the temporary restrictions due to the coronavirus mitigation lockdown. Within the recent COVID 19 outbreak that has challenged the world in an unprecedented manner, financial inclusion and Digital Financial Services (DFS) are seen as solutions to support the initial response and economic recovery of countries affected by the COVD-19 pandemic. Financially included people are better prepared to manage cash flow and mitigate risks, and thus more likely to be economically resilient.
As part of the partnerships, UNCDF is providing technical and financial support for design, rollout and implementation of the crowdfunding platforms, while at the same time monitoring and learning how such platforms can address the impacts of COVID-19 and beyond. This reflects UNCDF’s goal of providing “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development.
On this special day dedicated to Family Remittances, UNCDF is glad to kick off such partnerships to offer affordable, adapted and innovative financial services to support vulnerable groups in times of crisis.
Follow us to get updates on these two exciting projects and go #GrEEn !
The views expressed in this article are those of the authors alone and are not necessarily the views of UNCDF.