Author: Albert Ahiadu
Given the rapid rise of Ghana’s urban population, stakeholders are under immense pressure to develop cities to accommodate this increase. Several governments have begun to instate policies geared at making Africa an attractive investment destination for foreign investors and most crucially, the diaspora – citizens that are ordinarily resident outside their country’s borders. Ghana has approximately 4 million of her citizens in the diaspora, predominantly in the US, UK, Germany, the Netherlands, and South Africa. Most of them would like to invest back home, but face significant barriers in their attempts to do so, especially the high cost of transactions (an average cost of 8.2% on a $200 transaction).
According to the World Bank’s estimates, transfers made to Ghana through official channels such as banks amounted to US$3.52 billion, US$4.05 billion and US$3.57 billion in 2018, 2019 and 2020 respectively. These remittances contributed to almost 5% of the country’s GDP in 2020, representing a steady increase over the past decade. This increase was greatly boosted by the President’s ‘Year of Return’ campaign in 2019, a campaign intended to encourage the diaspora to settle and invest in the country. The campaign showed initial signs of life, and the global community welcomed the idea as tourism surged. 2019 alone saw a 15% increase in total remittance volume. The ‘Beyond the Return’ campaign, previously earmarked for 2020 has failed to build on the success of 2019, mostly due to the adverse effects of the coronavirus pandemic.
Despite all the efforts made, countries such as Kenya have enjoyed a much higher increase in remittance volume, from US$1.75 billion in 2016 to US$3.10 billion in 2020. This increase is largely due to the government’s attempts to improve investment institutions as well as the establishment of bodies such as the National Diaspora Council to provide a platform for the country’s diaspora. Considering the approximately 40% of these remittances are intended for property development and maintenance, it represents an unexplored source of income for Ghana’s ailing real estate market.
As the world returns to some form of normality, remittances are expected to increase once more. Lessons from other African countries such as Kenya can be drawn to better provide an enabling environment for the country’s diaspora to contribute to the development of her property market and consequently, the economy.
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