Nana Dwemoh Benneh, the Chief Executive Officer (CEO) of the Universal Merchant Bank (UMB), has declared the bank’s intention to develop specific banking products for financial technology (Fintech) start-ups engaged in the Bank of Ghana’s (BoG) Sandbox Project.

Mr. Benneh made this announcement during a panel discussion dubbed ‘Contemporary approaches to financing start-ups’ which was held as part of the 2021 edition of the Ghana Economic Forum.

“The bank [UMB] and the innovator can assess the usefulness, viability, and safety of innovations through a shared understanding of their respective interests.
“UMB’s analyses support the view that one of the most viable start-up ecosystems for the Ghanaian economy is in the technology/fintech arena.”
Nana Dwemoh Benneh

UMB’s CEO, highlighting successful start-up ventures within the West African Region, made reference to Nigerian start-ups such as OPAY and Flutterwave which have been able to raise over US$ 200 million in less than four (4) years.

“In this regard, we [UMB] think the Bank of Ghana’s Sandbox strategy is a game-changer and will incubate the ‘unicorns’ like Tik-Tok which will drive growth in this market.”
Nana Dwemoh Benneh

Nana Benneh, laying bare the bank’s blueprint for start-ups said, “our [UMB] intention is to be able to provide 360-degree support for these ventures”. According to him, this includes both liabilities and assets support, as well as a certain level of advisory support to access venture capital and international start-up funds.

“We [UMB] are happy to do this as a larger multi-bank policy initiative, but our medium-term strategy is clear, and we are focused on being the bank for digital Ghana.”
Nana Dwemoh Benneh

Benefits from investing in start-ups

According to the International Monetary Fund (IMF), “after a decade of experience, analysts now see that start-up or greenfield enterprises are an important alternative, or additional, path for increasing private sector activity”.

“Start-up or greenfield activity has been very important in expanding the size of the private sector and also in achieving efficiency gains in any economy.”
International Monetary Fund

Also, the IMF disclosed that, “while start-ups are pursuing platform-based approaches under minimal regulation, there is a clear trend for fintech companies to acquire balance sheets and, relatedly, banking licenses as they expand”.

In the meantime, as economies recover from the pandemic, the IMF recommends that “recruitment and start-up incentives, should be ramped up to shrink skill mismatches and encourage job creation, enabling unemployed workers to more quickly find new employment”.

Earlier this year, the Bank of Ghana in collaboration with EMTECH Service LLC., launched a regulatory and innovative sandbox pilot. This, the BoG disclosed, “is in line with its commitment to evolve an enabling and inclusive regulatory environment that promotes FinTechs and supports innovation”.

“The sandbox will be available to banks, specialised deposit-taking institutions and payment service providers including dedicated electronic money issuers as well as unregulated entities and persons that have innovations that meet the sandbox requirements.”

Bank of Ghana

According to the Bank of Ghana, the Sandbox initiative provides a supportive and controlled policy environment that enables firms to test innovative products, services, and business models under the supervision of a Regulator.

Also, the central Bank stated that it would like to reaffirm its commitment to addressing the financial inclusion needs of the unbanked and underserved persons through the Sandbox initiative.