‘eLevy’ Causes Mobile Money Concerns in Ghana

This week marks the launch of Ghana’s “eLevy,” a 1.5% tax on all mobile money transactions higher than 100 Ghanaian cedis (about $13).

But as the BBC reported Sunday (May 1), the tax — which applies to bank transfers and remittances as well — has raised concerns over the future of mobile money in Ghana, where nearly 40% of residents over 15 use that method to transfer funds.

There are indications that people have begun to reject the use of electronic payments. Ghana’s central bank said the industry has lost more than $1 billion as consumers started using cash in advance of the tax going into effect, according to the report.

Although the government has been trying to promote the digital economy and reduce cash use, it now says mobile money may drop within the first few months following the eLevy, the report stated, with Deputy Finance Minister John Kumah predicting “about 24% attrition rate in the three months to six months that we will introduce it.”

He added, per the report: “The same research told us what should be done to bring back these people after a while, and we have all these things in place.”

The report noted that Ghana has a highly informal economy, with less than 10% of its people paying direct taxes. Supporters of the eLevy said it will widen the country’s tax base, bring more revenue to the government and reduce Ghana’s $50 billion debt.

The tax was and is controversial, according to the report. There were physical altercations in Ghana’s parliament leading up to its passing. And even now, some merchants are worried about the impact it will have on their businesses.

Experts have offered other ways Ghana could boost its revenue, such as reconfiguring certain taxes, such as the personal or corporate income tax, the report stated.

In March, the Bank of Ghana said it wanted to make sure the country’s digital currency will work on payments platforms operated by mobile phone service providers.

Read more: Ghana’s Central Bank Wants Digital Currency Available on Mobile Apps

“It is important that the eCedi is implemented to complement and enhance the existing payment systems,” the central bank said at the time. “The various existing electronic and mobile payment solutions will therefore have to be interoperable with the eCedi to enable their utilization of the eCedi.”