Establish settlement banks to toughen local currencies – Zeepay CEO

0
banks
banks

Andrew Takyi-Appiah, the CEO of leading mobile money firm and member on Ghana Club100, Zeepay has called on Africa’s financial sector regulators to establish settlement banks to help stabilize the local currencies of the respective countries against the major foreign currencies like the dollar. 

Speaking in an interview on CitiTV’s Point of View, the Zeepay boss noted that local commercial banks in Africa are doing too many things and they are too stressed to be able to fully take on the challenge of helping stabilize local currencies.

“If you take the average commercial bank its capital is funding agriculture, manufacturing, fintech, and many other industries – they are stressed – the time has come for us to ask ourselves don’t we need dedicated settlement banks whose core focus will be to settle on behalf of local banks offshore – like we do with CitiBank, but this time resident in Ghana,” he asked.

He said such banks will operate something they call warehouse loans which they take from partner financial institutions offshore, and that enables their partners to make settles on their behalf offshore without the money actually leaving the shores of Africa, and that will cure the local currency stability problem to a very large extent.

Currently, Zeepay has enabled outbound remittance from six of its 25 African countries of operation to at least 200 destinations across the globe. But it has not yet gotten the greenlight in its own home country Ghana.

Andrew Takyi Appiah said the company’s blueprint for outbound remittance has for the past two years been in the Central Bank’s Regulatory Sandbox, still at testing stage.

The reason, as Techfocus24 learnt, is mainly to do with concerns about the possible adverse effect retail level outbound remittance could have on efforts to stabilize the cedi against the dollar, since outbound remittances would largely have to be settled in dollars.

But Andrew Takyi-Appiah argued that with dedicated settlement banks in place, they will get partners offshore in the receiving countries and use their lines of credit with those partners to settle so the money paid in Ghana will not have to leave the shores of the country.

This, he believes will help to ease pressure on the cedi and help to maintain its stability while allowing businesses to also innovate and trade in forex without being hampered.

“It will require some deep regulatory rethinking but it is very possible,” he said.

The Zeepay Boss also suggested that there is need to bring in more players like Zeepay that will drive inbound remittance to boost the flow of the dollar and other major foreign currencies into the country.

He is also of the view that when outbound remittance is simplified and allowed at the fintech level, it will help to eliminate the problem of panic transfers of huge chunks of foreign currency out of the country, because people will now be confident that they can do transfers in retail components legally, and wouldn’t have to do the panic-driven large transfers.

“What I can tell you about foreign exchange is that, it is like water, it will eventually find its level. However, regulatory intervention needs to be around these three areas we have proposed and we are confident our currency will be much stable against any of the major foreign currencies,” he said.

Send your news stories to newsghana101@gmail.com Follow News Ghana on Google News

LEAVE A REPLY

Please enter your comment!
Please enter your name here