1. FAIR VALUE REMITTANCES: LINKING MIGRANT REMITTANCES WITH MFIS Sending remittances across countries demand careful attention to ensure transfers arrive properly and can be quickly paid to the intended beneficiaries.

2. In late 2008, Sinapi Aba Trust decided to introduce remittance product to add up to the pool of financial service products it has in order to achieve financial sustainability through increased profitability.

3. PARTNERS Western Union through Ecobank Money System Money Gram through Merchant Bank Royaale Money Vigo through Merban Bank Cash4Africa

4. PERFORMANCE FOR THE YEAR 2010 So far this year Sinapi has been able to pay out to beneficiaries an amount of $12M.

5. What Are The Key Success Factors? Every institution that enters the remittance market agrees that operating a Remittance service puts to the test the institutional capacity of the MFI in terms of its management, staffing, systems and marketing.

6. MFI CAPABILITY  Overall financial and operational performance (stable, growing, shrinking). The institution must be well managed and governed, with stable, profitable and transparent operations for existing financial services.

7. MFI CAPABILITY Available human resources, and their knowledge of remittance operations. Remittance operations require a significant investment in skilled human capital. There is the need to leverage the specialized staff to provide specialized service for the clients.

8. MFI CAPABILITY  Capacity to manage the increased cash flow from money transfers. Capacity of management to handle cash management challenges. Making cash available on a consistent basis.

9. MFI CAPABILITY Resilience of the MFI’s systems and overall capacity for growth in transactions and number of clients. Capacity for managing transfers effectively (number of transactions, volume of clients to serve, value of payments to distribute).

10. MFI CAPABILITY  Data security. The MFI must protect its data and the security of payment instructions, because this can attract both internal and external fraud.

11. MFI CAPABILITY  Communication system and internet connectivity in all branch offices. These help to manage the volume of transfers, ensuring speedy delivery, guaranteeing transaction security and interface with other partners, and generate reports.

12. MARKET SITUATION  To succeed in remittance operation the institution needs to have country wide coverage. Presently Sinapi Aba Trust has 45 branches.

13. MARKET SITUATION  SAT has more than 90,000 clientele base of which more than 70% are in rural areas

14. MARKET SITUATION Continuous targeted marketing is the key to attracting new clients. Although some marketing on the receiving side is necessary and effective, marketing appears to have the most impact on the sending side, near the point of sale.

15. MARKET SITUATION Also remittance provides hard-to-reach clients of MFI a quality product at a lower cost.

16. MARKET SITUATION Provision of Remittance services attract new clients and open opportunities to cross-sell other microfinance products. Generate income (and ultimately profits) from a fee-based product.

17. MARKET SITUATION  With increasing competition among remittance providers, the quality of service that is offered is all the more important and sets MFI apart from the competition.

18. MARKET SITUATION Identification and penetration of an appropriate market niche. To identify an appropriate market niche, CGAP recommends that the MFI conduct a thorough market study to assess the potential value of the remittance product.

19. REGULATION While the opportunities of entering the remittance market may be numerous and extremely enticing, microfinance institutions should be aware of the regulatory framework prevailing in the country.

20. REGULATION  Governments in both sender countries and recipient countries seek to regulate and control illicit money transfers, money laundering and the financing of terrorism.

21. REGULATION  Regulations will determine whether the MFI will have: (1) to have a license in order to enter the market (2) direct access to foreign exchange (3) the legal right to become an agent or sub-agent of a money transfer company among other things.

22. REGULATION  In Ghana remittances are offered by financial institutions like the banks, non- bank financial institutions like the savings and loans companies and financial NGOs’ like the Microfinance Institutions.

23. REGULATION  There is no specific enactment to regulate the Remittance operations.  However there is Anti-Money Laundering Law (Act 749) which regulates control of illicit money transfers, money laundering and the financing of terrorism

24. REGULATION  And also the Foreign Exchange Law (Act 723) which regulates exchange of foreign currency, for international payment transactions and foreign exchange transfers.

25. REGULATION What it means is that in Ghana remittance operations can be conducted as long as you comply with the above provisions.

26. CHALLENGES The main challenges that MFIs who enter the remittance market face arise from the following; Due diligence on customers Software to the run the remittance business in terms of reporting on time Reconciliation should be regular

27. CHALLENGES Cash handling challenges Operational risk of fraud Communication and internet connectivity challenges Slow in reimbursement Bio data capturing problems Delays in clearing transfers in the sender’s country which irritates clients.