Remittances play a crucial role in the economic growth and development of recipient countries. They provide essential funds to families and communities for consumption purposes and constitute a significant stable source of income for recipients. Similarly about one third of remittances are also used for productive purposes, such as starting small businesses or house construction.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. In West Africa, Ghana has been a substantial beneficiary of global remittance flows, with remittances increasing at an annual rate of about 10% according to the Bank of Ghana (BoG).
Evidence shows that remittances are beneficial to the economy and help increase the level of small business activities and if used for productive purposes, significant multiplier effects on economic and social development can be achieved. The Remittance Grant Facility set up by the State Secretariat for Economic Affairs (SECO) of Switzerland addressed some of the operational constraints that hamper the development of new products and extended services for managing remittances, by sharing development costs and risks. As the fund manager, IDAS set up a challenge fund to provide grants to private sector actors to design and pilot remittance products and services. The project was implemented over four years from 2016 to 2020.
