LemFi Halts Services In Ghana Following Regulatory Pushback
LemFi, a fintech catering to banking and remittance services for immigrants, has announced the suspension of all its services to Ghana. This decision, impacting the ability to send money to banks and mobile money services within the country, comes in response to recent regulatory actions imposed by Ghana’s Central Bank.
“We recognise that this change will bring about some inconvenience, and we sincerely apologise,” a statement from the startup posted on its X account reads. “If anything changes in the future, you will be the first to know,” it adds, expressing gratitude to its users.
IMPORTANT UPDATE: Our services to Ghana 🇬🇭 pic.twitter.com/GbTzaawJVy
— LemFi (@UseLemfi) November 28, 2023
Earlier, the Central Bank of Ghana issued a notice barring eight money transfer organisations, including LemFi, from providing remittance services without obtaining regulatory approval. The list of affected companies also includes prominent names like Wise, Transfer Go, PayPal’s Xoom, SendValu, Boss Revolution, Aza Finance, and Supersonicz.
The notice issued by the Central Bank highlighted Section 3.1 of Ghana’s Foreign Exchange Act, 2006 (Act 723), which strictly prohibits the dealing of foreign exchange without the necessary licensing. Section 29.1 of the Act outlines penalties for operating without a license, which could result in fines or imprisonment.
Furthermore, the Central Bank’s notice explicitly cautioned the public, commercial banks, electronic money issuers, and payment service providers against engaging with the listed companies in any financial dealings.
Founded in 2020 by Rian Cochran and Ridwan Olalere, two ex-employees of the Nigerian fintech unicorn OPay, LemFi (formerly Lemonade FInance) currently provides multi-currency accounts to the swelling African diaspora and enables international transfers to and from more than 20 countries. In August, the startup announced a USD 33 M Series A to fund expansion efforts. The round was led by Left Lane Capital, with notable investors such as Y Combinator, Zrosk, Global Founders Capital, and Olive Tree, among others, also participating.
The regulatory constraints imposed on money transfer organisations have significantly impacted their ability to operate within Ghana. LemFi’s decision to suspend services in Ghana aligns with this regulatory landscape, leaving users unable to conduct remittance transactions within the country.
The move comes at a time when remittances play a crucial role in many African countries’ economies. According to World Bank data, remittance inflows to Sub-Saharan Africa saw moderate growth, amounting to an estimated USD 53 B in 2022, marking a slowdown compared to previous years.
As LemFi halts its operations in Ghana, the impact on both immigrants and the local economy remains a focal point. The disruption in remittance services can potentially affect the flow of funds for individuals and families reliant on these transactions, underscoring the importance of regulatory compliance and its implications on financial services within the region.
