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Bank of Ghana Issues Policy on Crowdfunding

Feb 19, 2021   •   by   •   Source: Proshare   •   eye-icon 1864 views

Friday, February 19, 2021   /02:10 PM / By Bank of Ghana/Header Image Credit: Shutterstock


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OnThursday, 4 February 2021, the Bank of Ghana issued a policy to promote andguide the development and use of crowdfunding products and services for thebanking sector. This is in line with the Bank's commitment to promote themodernisation of the banking industry, in a manner that meets the needs ofdiverse groups of people, so as to promote financial inclusion.

 

Locallyknown as "susu", "nnoboa" or "ntoboa", crowdfunding involves the collection offunds, usually in small amounts from individuals, to support projects orcauses. It has been traditionally employed by families, groups or communitiesto mobilise money to meet the needs of their members.

 

Marketwomen, farmers, fishmongers, traders, among other groups, haveused this  informal system as an instrument in themobilisation of critical funds to meet the pressing needs of members forinstance, to raise capital for businesses, payment of medical bills, funeralcontributions and children's education.

 

Withthe introduction of mobile money, associations and corporate entities havefound crowdfunding to be an efficient channel for collecting donations and forraising funds. Mobile money platforms have been used to raise funds for oldstudent association contributions, development contributions, funeral donationsand donations towards medical expenses of vulnerable persons.

 

Thisdevelopment signals the potential of digital platforms in transforming the traditionalcrowdfunding model to enhance its contribution to the implementation of theNational Financial Inclusion Strategy and the Digital Financial Services Policyobjectives of the country.

 

Withinthe last ten (10) years, a number of laws have been passed and directivesissued to position the financial sector to leverage digital technology forinclusive growth. Among these laws are the Payment Systems and Services Act2019 (Act 987), the Data Protection Act 2012 (Act 843), Banks and SpecialisedDeposit Taking Institutions Act, 2016 (Act 930), the Securities Industry Act,2016 (Act 929) and the Cybersecurity Act 2020.  Collectively, they provide the legal basis fordigital delivery of crowdfunding products and services,on which Bank of Ghana's crowdfunding policy is anchored.

 

Thispolicy will promote innovative digital crowdfunding solutions that comply withdata protection and customer privacy regulations, good governance and accountability,relevant Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT) norms, liquidation procedures and the protection of contributors' interest.

 

Modelsof crowdfunding currently permitted under Bank of Ghana's policy are donation-basedand reward-based crowdfunding. These models entail the collection, holding anddisbursement of funds, and are available to banks, Specialised Deposit-TakingInstitutions (SDIs), Dedicated Electronic Money Issuers (DEMIs) and EnhancedPayment Service Providers (EPSPs).

 

Inthe case of DEMIs, merchant wallets must be created and dedicated to the collectionof donations. The minimum due diligence requirements corresponding to the merchantaccount type stated in NOTICE NO. BG/GOV/SEC/2020/15 dated 3?óÔÇ×?ó4 December 2020shall apply. However, the EPSP will require the support of a bank or SDI tofully deliver the service since they do not issue electronic wallets oraccounts to their customers.

 

Inaddition to the models stated above, there are other variants of crowdfundingsuch as Debt (or Peer-to-Peer lending) and Equity models which deal withsecurities and loans and leverage payment platform for the collection anddisbursement of funds. By their nature, they fall within both the regulatoryjurisdiction of the Bank of Ghana and the Securities and Exchange Commission(SEC). To this end, the Bank of Ghana will collaborate with SEC to preventpossible regulatory arbitrage and to strengthen the stability of the financialsystem.

 

TheBank would like to encourage the general public to access the crowdfundingproducts to be provided by regulated entities, for their donation needs, forimproved disclosure, transparency and accountability.

 

DownloadHere - Bank of Ghana Crowdfunding Policy

 


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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