‘eLevy’ causes mobile money problems in Ghana
This week marks the launch of Ghana’s ‘eLevy’, a 1.5% levy on all mobile money transactions over 100 Ghana cedis (about $13).
But as the BBC reported on Sunday May 1, the tax – which also applies to bank transfers and remittances – has raised concerns about the future of mobile money in Ghana, where nearly 40 % of residents over the age of 15 use this method to transfer funds. .
There are indications that people have started to reject the use of electronic payments. Ghana’s central bank said the industry had lost more than $1 billion as consumers started using cash before the tax came into force, according to the report.
Although the government has tried to promote the digital economy and reduce the use of cash, it now says mobile money could plummet in the first months after eLevy, the report said, the deputy finance minister John Kumah predicting “an attrition rate of about 24% in the three months to six months that we introduce it.
He added, according to the report: “The same research told us what should be done to bring these people back after a while, and we have all of those things in place.”
The report notes that Ghana has a highly informal economy, with less than 10% of its population paying direct taxes. Proponents of the eLevy said it would broaden 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 before it was passed. And even now, some traders are worried about the impact it will have on their businesses.
Experts have suggested other ways for Ghana to increase its revenue, such as reconfiguring some taxes, such as personal income tax or corporate tax, the report says.
In March, the Bank of Ghana said it wanted to ensure that the country’s digital currency would work on payment platforms operated by mobile service providers.
Read more: Central Bank of Ghana wants digital currency to be available on mobile apps
“It is important that eCedi is implemented to complement and improve existing payment systems,” the central bank said at the time. “The various existing electronic and mobile payment solutions must therefore be interoperable with eCedi to enable their use of eCedi.