Securitisation, guarantees key to unlocking diaspora bond demand

Plans to raise long-term funding from the diaspora are increasingly focusing on more structured financial instruments rather than simple retail bonds.

This comes as policymakers are looking at ways to package remittance inflows and back them with guarantees, in an effort to turn rising overseas transfers into a more reliable source of investment capital while addressing persistent concerns about trust, data and regulation.

The Bank of Ghana (BoG) is positioning diaspora bonds as part of a broader strategy to diversify funding sources following debt restructuring, with Governor, Dr. Johnson Pandit Asiama highlighting the scale of inflows available to support this initiative.

Remittances rose to nearly US$7.8billion in 2025 from US$6.65billion in 2024. The 2025 figure is roughly four times the US$1.73billion in foreign direct investments (FDI) received that year. This was equivalent to roughly six percent of gross domestic product (GDP).

“Remittance inflows remain a cornerstone of Ghana’s external sector,” Dr. Asiama said at a diaspora engagement event in Washington during the IMF Spring Meetings.

He added that the goal now is to reposition these flows from consumption toward long-term investment, including infrastructure, small businesses and financial assets.

To achieve this, a policy paper by banking and corporate governance consultant Dr. Richmond Atuahene says it will depend on deploying more sophisticated financing structures – particularly securitisation of remittance flows and the use of external guarantees to improve credit quality and reduce borrowing costs.

Dr. Atuahene believes securitisation is a central mechanism to unlock diaspora demand. By packaging predictable foreign-currency inflows such as remittances, export earnings or tourism receipts into bond structures, Ghana could create instruments with lower risk profiles than conventional sovereign debt.

These structures, often issued through special purpose vehicles, allow repayments to be made directly from offshore inflows; thereby insulating investors from domestic fiscal risks.

This approach, he notes, has enabled countries such as Brazil and Turkey to achieve more favourable borrowing terms than their sovereign ratings would typically allow. For Ghana, it could open access to larger pools of capital at lower cost while addressing investor concerns about repayment reliability.

Alongside securitisation, the use of guarantees from multilateral institutions is seen as critical to restoring confidence after the country’s recent debt restructuring. Dr. Atuahene points to institutions such as the Multilateral Investment Guarantee Agency and African Export-Import Bank as potential partners to provide risk mitigation and technical backing.

“These measures are essential to rebuilding confidence,” he said, adding that diaspora investors – while often motivated by national ties – still require safeguards comparable to international investors.

That confidence problem has a precise dimension. The Domestic Debt Exchange Programme (DDEP), launched in December 2022, inflicted net present value losses estimated at GH¢87.5billion on local bondholders – with individual investors losing between 30 and 50 percent of portfolio value as high-coupon instruments were exchanged for bonds with initial rates as low as zero percent. The legacy of those losses sits directly in the path of any new government debt instrument, domestic or diaspora-targetted.

The central bank has indicated it is exploring foreign-currency-denominated investment products and structured vehicles in collaboration with state agencies, while also reviewing regulatory frameworks governing cross-border flows.

The central bank is additionally promoting digital channels to improve the efficiency and traceability of remittance and investment transactions.

Dr. Asiama said authorities are working to ensure that investment pathways for diaspora participants are seamless, credible and rewarding, including through partnerships with fintech firms and the use of digital ledger technologies under regulatory oversight.

However, structural weaknesses remain. Dr. Atuahene identifies gaps in diaspora data as a key constraint on successful issuance. Without detailed mapping of diaspora populations, income levels and investment preferences, bond structures risk being poorly targetted… limiting subscription levels.

He argues that improved data will allow authorities to design tailored products and communication strategies. “Without this, even well-designed bonds may fail to reach the right audience,” Dr. Atuahene noted.

Investor protection is another fault-line. The paper calls for stronger legal frameworks, including clearer bondholder rights, transparent fund management systems and compliance with international regulatory standards. Suggested measures include escrow arrangements, registration with foreign regulators and partial guarantees to enhance security.

Currency risk also remains a concern. Dr. Atuahene recommends issuing bonds in major foreign currencies such as the US dollar or euro to reduce exchange rate exposure, alongside tax incentives to improve returns.

Flexibility in product design – including varying denominations and payout options – is also seen as necessary to attract a broader range of diaspora investors, from retail savers to high-net-worth individuals.

That task is made harder by persistently high transfer costs: the average cost of sending US$200 to Ghana stands at seven percent of the amount transferred, more than double the United Nations Sustainable Development Goal target of three percent and a documented driver of informal remittance channels that fall outside the formal system any bond programme would need to reach.

A central theme across the recommendations is a need to link diaspora bonds with clearly defined, high-impact infrastructure projects. Earmarking proceeds for visible investments such as transport networks, energy systems and water infrastructure is viewed as essential to building trust and demonstrating accountability.

The emphasis on transparency reflects broader concerns following the DDEP. Dr. Atuahene stated that trust remains the binding constraint, noting diaspora investors must be assured funds will be used as intended and managed within credible institutional frameworks.

The BoG Governor echoed this positioning, describing the diaspora as integral to Ghana’s economic strategy rather than a peripheral funding source.

“The Ghanaian diaspora is not peripheral to our economy; it is central to our external stability, our investment strategy and our economic transformation agenda,” he said.

The policy direction comes as Ghana seeks to strengthen external buffers and reduce reliance on more volatile capital inflows. Remittances, which tend to remain stable during global downturns, are increasingly viewed as a reliable anchor for foreign exchange earnings.

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