Ghana’s government has repealed the Electronic Transfer Levy (E-Levy), a controversial tax on digital transactions, in a bid to restore public trust in financial technology platforms after a two-year decline in mobile money usage.
The move, effective immediately, reverses a policy introduced in May 2022 that imposed a 1.5% charge later reduced to 1% on electronic transfers, aiming to widen the tax base amid mounting public debt.
The levy triggered a 24% drop in mobile money transactions within its first year, according to Bank of Ghana data, with users shifting approximately GH₵15 billion ($1.2 billion) back to cash. Critics argued the tax disproportionately affected low-income households and informal businesses, which account for 70% of Ghana’s economy.
Digital Financial Services consultant Eunice Asantewaa Ankomah, a fintech strategist, hailed the repeal as a critical step toward rebuilding confidence. “Removing the E-Levy isn’t just about reducing costs—it’s about repairing the fractured trust in digital services,” she told The High Street Journal, where her analysis was published. Ankomah emphasized that small businesses, particularly in the informal sector, would benefit from eased integration into the digital economy. “Affordable transactions encourage electronic payments without hidden burdens on customers,” she added.
The policy reversal follows sustained public outcry and lobbying by fintech firms. Mobile money transactions had surged prior to the levy, with active accounts growing from 12 million to 19 million between 2020 and 2022. However, the tax reversed this trend, stalling Ghana’s progress as a regional leader in digital finance. Kwame Boahen, CEO of Accra-based fintech startup PayZen, noted, “This decision realigns Ghana with its goal of inclusive financial access.”
The E-Levy’s abolition underscores the delicate balance between fiscal austerity and economic inclusion in a nation grappling with 23% inflation and a debt-to-GDP ratio exceeding 80%. While the tax generated GH₵1.2 billion in 2023, it fell short of its GH₵4.5 billion target, revealing a trade-off between revenue and digital adoption. Similar taxes in Zimbabwe and Benin saw comparable cash resurgences, prompting regional policymakers to reassess their approaches.
Ghana now faces the challenge of replacing lost revenue without undermining financial access. Proposals include Kenya’s model of tiered exemptions for small transactions, which protects low-income users. Yet systemic barriers persist: 35% of adults lack formal identification, per World Bank data, excluding them from digital services, while rural areas contend with sparse banking infrastructure.
Economist Nii Moi Thompson of the University of Ghana warns that trust recovery hinges on consistent policy. “The damage wasn’t just financial it was psychological. Users need assurance that short-term gains won’t revive such levies,” he said. With mobile money transactions already rising 17% since the repeal, the focus shifts to sustaining momentum amid economic headwinds. For Ghana’s digital future, innovation, not taxation, may now drive the narrative.
