Source: Godfrey Elimian/ Technext
LemFi, an African fintech focusing on banking and remittance solutions for immigrants, has suspended all of its services to Ghana in response to recent regulatory actions by Ghana’s Central Bank. The move immediately affects the ability to transfer money to banks and mobile money services within the country.
In an official statement posted on its X account, LemFi expressed regret over the inconvenience caused by this decision, citing the recent regulatory restrictions. The startup emphasised its users’ importance and assured them of immediate updates should there be any changes in the future.
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This suspension follows the Central Bank of Ghana’s notice barring eight money transfer entities, including LemFi, from providing remittance services without obtaining proper regulatory approval. Notable names in the list of affected companies include Wise, Transfer Go, PayPal’s Xoom, SendValu, Boss Revolution, Aza Finance, and Supersonicz.
The Central Bank’s notice referred to Ghana’s Foreign Exchange Act, 2006 (Act 723), which strictly prohibits foreign exchange dealings without the required licencing. Operating without a license, as outlined in Section 29.1 of the Act, could lead to fines or imprisonment.
Founded in 2020 by Rian Cochran and Ridwan Olalere, both former employees of the Nigerian fintech unicorn OPay, LemFi, previously known as Lemonade Finance, serves the African diaspora by providing multi-currency accounts and facilitating international transfers across more than 20 countries.
The startup recently secured a $33 million Series A funding round in August, spearheaded by Left Lane Capital and supported by investors like Y Combinator, Zrosk, Global Founders Capital, and Olive Tree.
The regulatory clampdown on money transfer firms has significantly impacted their operations in Ghana. LemFi’s decision to suspend services aligns with these regulatory challenges, leaving users unable to conduct remittance transactions within the country.
The suspension of LemFi’s operations in Ghana has sparked concerns regarding its repercussions on immigrants and the local economy. The disruption in remittance services could impede the flow of funds for individuals and families reliant on these transactions, underscoring the critical role of regulatory compliance and its profound impact on financial services in the region.
This development arrives at a critical juncture when remittances hold substantial importance for many African economies. World Bank data suggests moderate growth in remittance inflows to Sub-Saharan Africa, reaching an estimated USD 53 billion in 2022, showcasing a slowdown compared to previous years.
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Source: Godfrey Elimian/ Technext
