GH¢10bn reduction in Mobile Money value due to fear of e-levy Implementation

April 5th, 2022 at 12:38 pm

Available data reveals that the mobile money platform has lost approximately GH¢10billion in value between November 2021 and January 2022 even before the Electronic Transaction Levy (E-levy) takes effect next month,– a development that shows serious concerns about the new tax’s ability to rake in the expected revenue.

According to the Economic and Financial data (March 2022) Summary, published by the Bank of Ghana, the mobile money platform which is the highest payment system network in the country – seen as the main driving force of financial inclusion – saw its transaction value reduced to GH¢76.2billion in January 2021 from the GH¢86.1billion recorded in November 2021 (the month the E-levy was announced), showing a drop of GH¢9.9billion. The platform has by no means seen such a significant reduction in value over the space of any two months within a year ever since it was introduced.

Besides the reduction in value on the platform, the overall number of transactions also went south as it brought a 24 million decline in January 2022 from November 2021. The number of active agents also reduced by 7,000 within the same period, while active mobile money accounts also dropped by 600,000 in the same period.

All these reductions experienced since November 2021 when the Finance Minister Ken Ofori-Atta announced the E-levy drives us to this conclusion – that mobile money users are not prepared to pay the proposed tax and may have exposed to other cash alternatives. Meanwhile, that is the platform government has targeted and budgeted to get a piece of the E-levy from.

In an interview with the B&FT, Senior lecturer at the University of Ghana Business School Dr. Vera Fiador concurs with the fact that an expected GH¢7billion revenue targeted from the E-levy will not be accomplished – given the reluctance to use the mobile money platform by users even before implementation of the tax from May 1, 2022.

“There is a high Possibilities that the revenue target from the mobile money will not be accomplished. From what is going on, by the time they are ready to enforce the taxation, most people who can do without the mobile money will hive-off. The overall effect on small businesses will be huge, and so we are going find a lot of them doing cash transactions now. People will go to their respective banks to cash their money or use the ATM and pay over the counter,” she said.

She came out with concerns that the poor will bear the greatest burden of the new tax, due to the fact the mobile money platform is their only option when it comes to financial transactions.

“If you look at the demographics, who are those who do not have any choice but to use the mobile money? It is the those at the base of the pyramid. So, in a sense, we are punishing the poor. All the rest have options, for example cheques, but the poor do not have any other option except to use mobile money. I am a bit worried because we are going to undo what we have built over the years, and in the process make the poor even poorer. The cascading effect and the inequality aspect is a bit worrying,” she said.

The Finance Minister mentioned that the E-levy has been changed to 1.5 percent and will take effect from May 1, 2022.