Even before the Electronic Transaction Levy (E-levy) takes effect next month, available data show that the mobile money platform has lost about GH¢10billion in value between November 2021 and January 2022 – a development that raises serious concerns about the new tax’s ability to rake in the anticipated revenue.
According to the Summary of Economic and Financial data (March 2022) published by the Bank of Ghana, the mobile money platform which is the largest payment system network in the country – seen as the main driver of financial inclusion – saw its transaction value decline to GH¢76.2billion in January 2021 from the GH¢86.1billion recorded in November 2021 (the very month the E-levy was announced), indicating a drop of GH¢9.9billion. The platform has never seen such a colossal decline in value over the space of any two months within a year ever since it was introduced.
Besides the drop in value on the platform, the total number of transactions also went south as it saw a 24 million decline in January 2022 from November 2021. The number of active agents also saw a decline of 7,000 within the same period, while active mobile money accounts also decreased by 600,000 in the period under discussion.
All these declines experienced since November 2021 when the E-levy was announced by Finance Minister Ken Ofori-Atta points to one conclusion – that users of the mobile money platform are not ready to pay the proposed tax and may have resorted to cash options. Meanwhile, that is the platform government has targetted and budgeted to get a chunk of the E-levy from.
Commenting on this development in an interview with the B&FT, Senior lecturer at the University of Ghana Business School Dr. Vera Fiador agrees with the fact that an expected GH¢7billion revenue targetted from the E-levy will not be achieved – given the reluctance to use the mobile money platform by users even before the implementation of the tax from May 1, 2022.
“Chances are high that the revenue target from the mobile money will not be achieved. From what is going on, by the time they are ready to implement the taxation, most people who can do without the mobile money will hive off. The net effect on small businesses will be huge, and so we are going to find a lot of them doing cash transactions now. People will walk into the banking hall, cash their money or use the ATM and pay over the counter,” she said.
She reiterated concerns that the poor will bear the heaviest burden of the new tax, considering 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 has said the E-levy has been revised to 1.5 percent and will take effect from May 1, 2022.
Massive withdrawals hit the various Mobile Money (Momo) vending outlets across the country after the passage of the electronic transaction Levy (E-levy) by Parliament on Tuesday, March 29, 2022.
Some Mobile Money vendors who spoke to the media on Wednesday, March 30, 2022, said there have been massive withdrawals since yesterday after Parliament’s passage of the E-levy bill.
They indicated that the majority of those who have come to transact business with them are withdrawing and none depositing.
They noted that the E-levy can collapse their business if the President assents the bill into law in the coming days.
Some people who went ahead to withdraw their money from their Mobile Money accounts told also Elisha Adarkwah that it was because of the passage of the E-levy bill.
Elisha Adarkwah reported that people are withdrawing as much as GHS5,000 and GHS4,000 from their wallets.
The mobile money vendors expressed worry the rush for withdrawal of monies by the customers will collapse their business.
They called on the government to exempt momo transactions from the E-levy.
Meanwhile,
President Akufo-Addo justified the passing of the controversial Electronic Transaction Levy (E-levy) stating that it will aid in reviving the economy.
In an interview with BBC’s Peter Okwoche, the President emphasized that his government is doing all it can to revive the economy and bring it to the state Ghanaians want it to be.
“In Ghana, the recovery programme we have is very credible and that is what is going to give us the opportunity to come out of this period a stronger economy, and it is that future we are looking at.
The digital economy is emerging as the biggest economy in the country and for a long period, it has not had any tax at all, so it is important that it also comes into the net,” he stated.
He continued “The world is going through very difficult times. Ghana is no exception, Nigeria is no exception. There is no country in the world that has escaped the ravages of COVID-19. What you need to look at is the elements being put on the ground that looks beyond the Russia Ukraine war.”
