Bank of Ghana Issues Policy on Crowdfunding


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

 Proshare Nigeria Pvt. Ltd.

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


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


Market women, farmers, fishmongers, traders, among other groups, haveused this  informal system as an instrument in the mobilisation of critical funds to meet the pressing needs of members for instance, to raise capital for businesses, payment of medical bills, funeral contributions and children's education.


With the introduction of mobile money, associations and corporate entities have found crowdfunding to be an efficient channel for collecting donations and for raising funds. Mobile money platforms have been used to raise funds for old student association contributions, development contributions, funeral donations and donations towards medical expenses of vulnerable persons.


This development signals the potential of digital platforms in transforming the traditional crowdfunding model to enhance its contribution to the implementation of the National Financial Inclusion Strategy and the Digital Financial Services Policy objectives of the country.


Within the last ten (10) years, a number of laws have been passed and directives issued to position the financial sector to leverage digital technology for inclusive growth. Among these laws are the Payment Systems and Services Act 2019 (Act 987), the Data Protection Act 2012 (Act 843), Banks and Specialised Deposit Taking Institutions Act, 2016 (Act 930), the Securities Industry Act, 2016 (Act 929) and the Cybersecurity Act 2020.  Collectively, they provide the legal basis for digital delivery of crowdfunding products and services, on which Bank of Ghana's crowdfunding policy is anchored.


This policy will promote innovative digital crowdfunding solutions that comply with data 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.


Models of crowdfunding currently permitted under Bank of Ghana's policy are donation-based and reward-based crowdfunding. These models entail the collection, holding and disbursement of funds, and are available to banks, Specialised Deposit-Taking Institutions (SDIs), Dedicated Electronic Money Issuers (DEMIs) and Enhanced Payment Service Providers (EPSPs).


In the case of DEMIs, merchant wallets must be created and dedicated to the collection of donations. The minimum due diligence requirements corresponding to the merchant account type stated in NOTICE NO. BG/GOV/SEC/2020/15 dated 3â„¢4 December 2020 shall apply. However, the EPSP will require the support of a bank or SDI to fully deliver the service since they do not issue electronic wallets or accounts to their customers.


In addition to the models stated above, there are other variants of crowdfunding such as Debt (or Peer-to-Peer lending) and Equity models which deal with securities and loans and leverage payment platform for the collection and disbursement of funds. By their nature, they fall within both the regulatory jurisdiction of the Bank of Ghana and the Securities and Exchange Commission (SEC). To this end, the Bank of Ghana will collaborate with SEC to prevent possible regulatory arbitrage and to strengthen the stability of the financial system.


The Bank would like to encourage the general public to access the crowdfunding products to be provided by regulated entities, for their donation needs, for improved disclosure, transparency and accountability.


Download Here - Bank of Ghana Crowdfunding Policy


Proshare Nigeria Pvt. Ltd.

Related Posts on Crowdfunding 

1.      SEC Crowdfunding or Venture Capital Financing. Which One Works? - Feb 04, 2021

2.    Crowdfunding Rules and Regulations in Nigeria Released by SEC - Jan 27, 2021

3.     SEC Proposes Rules on Collateral Management Company, Crowdfunding and Other Sundry Amendments - Sept 09, 2020

4.     Viability of Crowdfunding as a Source of Capital - May 29, 2020

5.     Benefits of Crowdfunding as a Source of Capital - May 22, 2020

6.     Benefits of Leveraging on Crowdfunding for MSMEs - May 08, 2020

7.     Crowdfunding: A Viable Capital Raise Solution for Enterprises - Apr 24, 2020

8.     SEC Issues Exposure of Its Proposed Crowdfunding Rules - Mar 29, 2020

9.     SEC Issues Clarifications on New Rules on Collective Investment Schemes

10.  Fair Dealing in Advertising: Guidance For Crowdfunding And Peer- to-Peer Lending Published (NZ) - May 24, 2018

11.   US Securities and Exchange Commission (SEC) finalizes rules for Crowdfunding - Mar 01, 2017

12.  SEC-NYU Dialogue On Securities Market Regulation: U.S. Securities-Based Crowdfunding - Mar 01, 2017

13.  Dubai FSA Launches 2nd Consultation Into Crowdfunding Framework To Support SME Financing - Feb 02, 2017

14.  Dubai Financial Services Authority Proposes Framework For Loan-based Crowdfunding for SMEs - Jan 31, 2017

15.  Alberta SEC Adopts Crowdfunding Rule Enabling Alberta's SME's To Raise Capital Online - Nov 01, 2016

16.  UK's Financial Conduct Authority Launches Call For Input on Crowdfunding Rules - July 08, 2016

17.  IOSCO Publishes Statement on Regulation of Crowdfunding - Dec 22, 2015

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Related News