MICROCAPITAL BRIEF: Bank of Ghana Issues Crowdfunding Policy

Bank of Ghana (BOG), the central bank of the country, recently launched a policy aiming to promote and guide the use of crowdfunding, whereby people fundraise in small amounts from many individuals. Since long before it could be performed electronically, people have used the concept to raise funds from friends and family for purposes such as business, medical, education and funeral expenses. The new policy encourages users to crowdfund via financial institutions, with the goal of increasing financial inclusion, accountability and the protection of funders’ interests as well as reducing the incidence of money laundering and terrorism financing.

Crowdfunding models can be classified as: (1) donation crowdfunding; (2) reward crowdfunding, whereby funders receive non-financial rewards, such as priority access to a newly launched product; (3) equity crowdfunding, through which investors acquire equity in the startup or share of future revenue; and (4) debt crowdfunding, also known as peer-to-peer lending.

The new policy outlines how donation- and reward-based crowdfunding models can be used through financial services providers in Ghana. Equity and debt crowdfunding models are to be regulated in coordination with Ghana’s Securities and Exchange Commission.

Established in 1957, BOG has regulatory and supervisory authority over banking and other financial institutions in Ghana, including credit unions, rural and community banks, and savings and loan companies. The mandate of BOG is to “maintain stability in the general level of prices, to ensure efficient operations of the banking and credit systems, and to support general economic growth.” BOG issues monetary and fiscal policies, and it acts as a banker and financial adviser to the government. BOG also performs annual on-site audits of the microfinance institutions within its purview through its Other Financial Institutions Supervisory Department. As of year-end 2019, BOG had total assets of GHS 58 billion (USD 10 billion).

By Aakansha Shenoy, Research Associate

Sources and Additional Resources

Bank of Ghana press release
https://www.bog.gov.gh/wp-content/uploads/2021/02/NOTICE-CROWDFUNDING-POLICY.pdf

Bank of Ghana crowdfunding policy
https://www.bog.gov.gh/wp-content/uploads/2021/02/CROWDFUNDING-POLICY.pdf

Bank of Ghana homepage
https://www.bog.gov.gh/

Securities and Exchange Commission (Ghana) homepage
https://sec.gov.gh/

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