Let’s say you can make a good living in Ghana. Anecdotally, I understand there is a collection of traders, attorneys government contractors, builders, and CEOs who all do pretty well. I wouldn’t be surprised if they cleared more than $200K a year in profits. Heck, I’ve met people making that sum in a month.
A Little About Banking in Ghana
You then have a conundrum because the Bank of Ghana places restrictions on the withdrawal/transfer of funds out of the country. I believe the restriction for an individual or corporation is prohibited from transferring more than $10,000 per year unless you can provide an invoice cataloguing goods and services provided. For instance, if you send your children out of the country for schooling, you can transfer funds for their school fees.
If your Ghanaian, then there are no restrictions on opening accounts in the country. For foreigners, you must provide a residency permit and/or work permit showing you have a legal right to stay in Ghana.
Banks offer you the ability to hold your money in “on-shore” and “off-shore” accounts. My understanding is that the money you make in Ghana is held in the “on-shore” accounts and could be held cedis as well as dollars, euros, Swiss francs, British pounds. Thus, say you received dollars in Ghana, then you theoretically could hold those dollars in your on-shore dollar account. Meanwhile, you will also do business with vendors outside of Ghana. Therefore, banks offer you to hold foreign currency in “off-shore” accounts that are held in Ghana. If your foreign supplier pays you from Germany, then, I believe, you can hold those euros in your off-shore euro account held in Ghana.
Due to the rapid depreciation of the cedi, the Bank of Ghana implemented several policies intended to halt it. Basically, the Bank of Ghana compelled commercial banks to require all of their customers to transact in cedis. Thus, even if you held dollars in either an on-shore or off-shore account, you could only withdraw those funds in cedis. Compounding that inconvenience, both the BoG and the commercial banks use exchange rates that are way below the rates used at forex bureaus. For instance, today the BoG states that the exchange rate is 3.05-3.06; Fidelity Bank Ghana’s cash exchange rate is 3.40-3.80; lastly, just a couple of days ago, the Accra Mall forex bureau was offering 3.70-3.85. Thus, banks were requiring their customers to withdraw dollars at 3.40. Sometimes, I’ll be short cash and I’ll have to run to the ATM. For some reason, Barclays uses the BoG’s 3.05 rate.
Fortunately, the BoG reversed many of the restrictions it placed on forex transactions earlier this year. Now, you can withdraw your on-shore/off-shore dollars in dollars rather than be compelled to do it in cedis. As the cedi continued to fall from 2.40 to 3.80, the BoG had to conceded that these forex restrictions were not curbing the rapid depreciation they were meant to halt. For many, this reversal in policy suggested that the BoG doesn’t have a good understanding of what influence they actually have on foreign exchange rates and the economy in general.
For the average business owner or person working in Ghana, the ability of the BoG to change transfer rules seemingly on a whim, should give you pause. After all, it’s your money. But for Ghanaians, if it’s also your country, then you have another problem: where do you put your money?