Remittances play a crucial role in the recipient countries’ economic growth and development. Recorded remittances are more than three times the size of official development assistance and nearly two-thirds of foreign direct investment flows to developing countries. It is recognized that remittances contribute substantially to poverty reduction and grassroot livelihood development.
When remittances are used for small business investments, the multiplier effect becomes larger and more sustainable as they create an income possibility. Evidence shows that remittances help to increase the level of small business activity.
In Ghana, remittance flows constitute a substantial proportion of GDP and have had a significant impact on the economy over the past decade.
Remittances provide essential funds to families and communities for consumption purposes (food, housing, education, medical and funeral costs). Remittances generally constitute a significant and stable source of income for recipients. On the other hand, about one third of remittances are also used for productive purposes, such as starting small businesses or house construction. There is potential to increase the leverage of remittances for longer-term developmental objectives.
The Remittance Grant Facility (RGF) will contribute to addressing the operational constraints that hamper the development of new products and services by sharing the development costs and risks. The RGF will do so through the provision of grants to private sector actors to support the design and pilot testing of remittance products and services that increase affordability and accessibility in Ghana.