VZCZCXRO8999
RR RUEHPA
DE RUEHAR #0829/01 1010847
ZNR UUUUU ZZH
R 110847Z APR 06
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 0948
INFO RUEHZK/ECOWAS COLLECTIVE
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUCPDOC/USDOC WASHDC 0561

UNCLAS SECTION 01 OF 03 ACCRA 000829 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USAID 
TREASURY FOR LUKAS KOHLER 
USTR FOR LAURIE-ANN AGAMA 
 
E.O. 12958: N/A 
TAGS: EINV ECON ETRD EFIN GH
SUBJECT: USAID CONFERENCE HIGHLIGHTS OPPORTUNITIES FOR 
INCREASED REMITTANCES AND TRADE IN WEST AFRICA 
 
 
ACCRA 00000829  001.2 OF 003 
 
 
Summary 
------- 
¶1. USAID sponsored a conference and technology fair in Accra, 
March 30-31, 2006, to disseminate research highlighting the 
opportunities and issues for increased remittances and trade 
into and within West Africa.  The conference goal was to 
discuss ways for the private sector to access more of the $10 
billion dollar estimated remittances and trade settlement 
market in Ghana, Mali, Nigeria and Senegal, and to increase 
the net and gross flows of remittances to Ghana and enhance 
their development impact.  Over 200 individuals representing 
the financial services sector, government, donors, academia, 
and business and trade associations, participated in the 
conference.  West African participants from the financial 
sector showed great interest in the research and market 
opportunities presented, but emphasized that governments in 
the region must create the appropriate environment.  The 
conference highlighted the serious challenges traders and 
private individuals face when trying to conduct international 
financial transactions.  The text of speeches given and 
research papers presented at the conference will be posted on 
the watradehub.com website.  End Summary. 
 
¶2. From March 30-31, 2006, Accra was host to "The Accra 
Regional Forum on Remittances and Trade."  USAID sponsored 
the conference, and the GoG and Economic Community of West 
African States (ECOWAS) co-hosted.  The conference goal was 
to engage financial sector actors, policy makers and donors 
in discussing the issues and opportunities for increased 
remittances and trade into and within West Africa, 
specifically Ghana, Mali, Nigeria, and Senegal, and to 
increase the net and gross flows of remittances to Ghana, 
enhancing their development impact. 
 
¶3. USG participation included opening remarks by Ambassador 
Bridgewater and closing remarks from the USAID West Africa 
Mission Director.  USAID, State, and Treasury officials based 
in Ghana and Senegal attended the conference.  West African 
Government officials, representatives from the UNDP and the 
International Migration Office, as well as international 
donors such as the UK's DFID also attended.  However the 
overwhelming attendance was from the private sector, 
representing national and international commercial banks, 
money transfer companies, microfinance institutions, and 
trade associations interested in expanding their operations. 
 
¶4. Ambassador Bridgewater opened the conference citing U.S. 
assistance to Africa in support of financial sector reform 
and trade, and highlighting key research findings including 
that 10% of West Africans work outside their country of 
origin and conduct an estimated $10 billion in remittances 
and trade settlements each year in the region, mostly outside 
of the formal economy.  Ghana receives more than $1 billion a 
year in remittances from private individuals living abroad, 
and these remittances are unique in that the amounts sent 
continue to grow over time.  The Ambassador ended her remarks 
with a request for the conference participants to focus on 
concrete steps to create the right environment to funnel more 
financial resources into the private sector so they can play 
a more significant role in West Africa's development. 
 
¶5. Other opening ceremony speakers included The Ambassador of 
the Netherlands to Ghana, the Governor of the Bank of Ghana, 
Togo's National Director of the Central Bank of West African 
States, and the Director General of the West African Monetary 
Institute.  The President of Ghana was represented by Ghana's 
Minister of Interior.  Opening ceremony speakers covered 
topics including the connection between migration and 
economic development, the need to implement policies that 
will mitigate migration by reducing poverty and increasing 
economic growth, the need to understand how remittances can 
be used to support development, costs related to money 
transfers and financial transactions in the region, the pace 
of regional economic integration, data needs on remittances 
and financial transactions, and the political will required 
for reform. 
 
¶6. In side sessions, USAID-sponsored researchers presented 
the findings of research conducted on remittances to Ghana 
from the U.S., Europe and Canada, and on remittances and 
trade settlements between the countries of Ghana, Mali, 
Nigeria and Senegal.  Conference working groups developed 
recommendations on policies and actions to pursue to enable 
the private sector to attract more remittances and trade 
 
ACCRA 00000829  002.2 OF 003 
 
 
settlement transactions.  The technology fair allowed money 
transfer companies from Latin America, Europe, West Africa 
and the U.S. to demonstrate the latest technology used to 
transfer money internationally. 
 
RESEARCH FINDINGS:  ENABLING ENVIRONMENT HINDERING FORMAL 
TRADE SETTLEMENTS AND REMITTANCE FLOWS 
--------------------------------------------- ------- 
¶7. The researchers presented two sets of findings at the 
conference.  The first was specific to remittances to Ghana 
from Germany, U.S., and UK, and the second was based on 
research on remittances and trade within the West African 
countries of Ghana, Mali, Nigeria and Senegal. 
 
¶8. (U) The Ghana-specific research focused on the legal and 
regulatory framework in Ghana that controls the remittances 
market, the financial institutions that process remittances 
to Ghana, and characteristics of remittance senders and 
receivers.  Dr. Manuel Orozco of Inter-American Dialogue, one 
of the world's premiere remittance experts, pointed out that 
remittances are not a solution for economic growth in 
developing economies, and that the ability to use remittances 
productively in a country increases with improved economic 
structures.  Ghana's immigrants are unique in that they 
remain more engaged in their home country in comparison with 
other immigrant groups, with many owning property in Ghana 
and most sending more money to recipients over time.  Income, 
age and level of engagement in the home country are the 
primary determinants of the amount of funds sent home. 
 
¶9. Regional research on remittances and trade showed that the 
value of financial transactions between Ghana, Mali, Nigeria 
and Senegal amounts to $2 billion annually in remittances 
from migrant laborers and perhaps as much as $8 billion in 
trade settlements.  Overly restrictive government policies, 
the inconvertibility of currencies in the region, and 
corruption have the effect of driving most of this 
potentially legitimate business into the informal economy. 
 
¶10. Small and medium-sized businesses have the most 
difficulty gaining access to formal mechanisms and 
institutions that could provide business loans and financial 
settlements services.  Microfinance institutions and credit 
unions that service part of this market are operating under 
financial regulations that make it difficult to service the 
full needs of their clients, with the settlement of regional 
transactions particularly difficult.  Technology may provide 
options that will encourage greater use of formal systems. 
Researchers noted the irony of low levels of regional 
integration given traditionally high levels of migration and 
mobility of traders within the region.  They charged 
government and private institutions with neglecting the 
financial needs of regional traders and individuals in the 
region. 
 
¶11. The report provided new insight into the impact of 
corruption on trade. Businesses in Ghana and Nigeria 
estimated that 10% or more of their costs go to 
under-the-table payments and kickbacks to government 
officials.  The report also found evidence that officials in 
Ghana who are reluctant to accept bribes at first eventually 
come to rely on bribes to make up for low salaries. 
 
RECOMMENDATIONS:  ENCOURAGE COMPETITION, FINANCIAL SECTOR 
POLICY REFORM, IMPROVED PRODUCTS, PILOT PROGRAMS 
--------------------------------------------- ------- 
¶12. For Ghana, researchers suggested that new banking 
products, banking reform, formation of an industry clearing 
house, and encouraging hometown associations of Ghanaians 
overseas could increase the gross and net flows of 
remittances to Ghana, and enhance their developmental impact. 
 Specific recommendations included improving rates on savings 
instruments, steering away from exclusive arrangements with 
banks by remittance companies, liberalizing foreign exchange 
policy and allowing for savings accounts in different 
currencies. 
 
¶13. Regional research identified short and long-term 
recommendations.  Short-term recommendations included 
increasing government and financial institution awareness of 
regional traders and migrants demand for financial services, 
raising awareness through successful pilot projects for cross 
border payments, providing financial education to financial 
services providers and migrants, liberalizing foreign 
 
ACCRA 00000829  003.2 OF 003 
 
 
exchange policies at a national and regional level using 
Ghana's new foreign exchange law as a possible model for the 
region, and encouraging currency convertibility between 
countries that conduct significant trade with each other 
(such as Ghana and Nigeria).  Longer-term recommendations 
included improving data to measure the flow of money 
resulting from trade settlements and remittances regionally, 
and streamlining documentation to facilitate trade within the 
region. 
 
COMMENT:  CONFERENCE EXEMPLIFIES THE CHALLENGES DISCUSSED 
--------------------------------------------- ------ 
¶14. Unwittingly, the conference and technology fair 
demonstrated some of the challenges under discussion that 
hinder both investment in the financial service sector and 
trade in West Africa.  The internet service at the hotel was 
too slow for some of the money transfer firms to demonstrate 
their technology.  The electricity went out twice during the 
event.  Conference participants were shocked to be advised 
against using credit or ATM cards anywhere in Ghana due to 
fraud.  Despite these challenges, the conference was a 
positive step forward.  It provided the private sector and 
governments in the region with data needed to understand the 
motivations behind remittance senders and receivers.  It also 
highlighted the market opportunity for financial services for 
the regional remittance and trade markets, and the policy 
reforms needed to change the status quo.  Private companies 
thanked USAID for conducting the research and engaging 
governments in discussions on needed financial sector reform. 
 Activities supporting increased remittance flows to Ghana, 
as well as financial sector reform that supports regional 
formal trade and remittances, are both clearly needed to 
allow the private sector to take advantage of the enormous 
financial service opportunity that exists and is growing in 
West Africa.  End Comment. 
LANIER