Ghana’s government has repealed the controversial electronic transfer levy (E-Levy), a move economists say could revitalize mobile money usage and advance financial inclusion across the nation.
The decision, announced this week, follows years of criticism that the tax stifled digital transactions and undermined efforts to integrate informal sectors into the formal economy.
Introduced in May 2022 under former President Nana Akufo-Addo, the E-Levy initially imposed a 1.75% charge on mobile money (MoMo) transfers and other digital payments. After public backlash, rates were cut to 1.5% and later 1% by 2023. Despite adjustments, the policy faced sustained opposition from citizens and businesses, who argued it eroded trust in digital financial systems.
“A Necessary Correction”
Renowned economist Professor Godfred Alufar Bokpin hailed the repeal as a critical step toward economic recovery. “This reversal will directly boost mobile money adoption, which is essential for formalizing informal economies and driving inclusive growth,” he said during an interview on PM Express on March 26. Bokpin, a professor at the University of Ghana, emphasized that taxing digital transactions contradicted global best practices for financial inclusion, noting that Ghana’s MoMo activity plummeted by nearly 30% post-levy.
The E-Levy also drew fire for double taxation. Salaried workers, for instance, faced charges on already-taxed income when sending funds to family or partners. “Taxing such transactions wasn’t just regressive—it was counterproductive,” Bokpin asserted.
Businesses and financial institutions grappled with operational hurdles, as frequent tax rate changes forced costly system upgrades. Small enterprises, particularly in rural areas, reported reduced transaction volumes, with many reverting to cash-based exchanges to avoid fees.
The levy’s repeal aligns with broader efforts to stabilize Ghana’s economy, which has battled inflation exceeding 20% and a debt restructuring program. Analysts argue that reviving MoMo usage could spur consumption and liquidity, vital for recovery.
With the E-Levy abolished, mobile money platforms anticipate a surge in transactions. Prior to the tax, Ghana’s MoMo sector facilitated over $100 billion annually, serving 40% of the unbanked population. Stakeholders now urge renewed public trust-building campaigns and infrastructure investments to sustain growth.
“Digital finance is a lifeline for millions,” Bokpin added. “Removing this barrier reaffirms Ghana’s commitment to inclusive development.”
The policy shift underscores a broader trend in Africa, where nations like Kenya and Nigeria have prioritized digital financial ecosystems to drive economic resilience. For Ghana, the focus turns to ensuring the reversal translates into tangible gains for households and businesses alike.
