Even though the E-Levy on electronic transactions has not taken effect yet, the telcos say they have started seeing some human behavioral changes towards the use of MoMo for payments since the announcement of the levy.
A day after the announcement, some media houses reported that there were panic withdrawals from MoMo wallets. Whereas the telcos say they are yet to confirm if indeed some unusual volumes of withdrawals have taken place, they can firmly confirm that PAYMENTS with MoMo have slowed down considerably since the announcement.
According to one industry captain, they have seen a considerable reduction in the use of MoMo for bills payment, shopping and for other payments over the last few days since the E-Levy was announced.
The Finance Minister announced a 1.75% E-Levy on all electronic transactions in the country, including mobile money, online shopping, ATM withdrawal, payments via GHQR and other digital financial transactions. The intent, according to the minister, is to rope in the informal sector into the tax net, as a greater chunk of business transactions in that sector has been found to take place digitally due to Covid-19.
The irony is that while the industry players have given some discounts and waived fees due to Covid-19, government is using the boost in digital transactions due to Covid-19 as reason to implement a tax that is far higher than even the default service fees charged by the industry players. The default service fee is 1% or less, and the E-Levy is 1.75%.
Per the account of the telcos, now people are gradually returning to cash payments more than using MoMo and other digital wallets. The question still remains as to whether the trend will continue until it derails the entire cashlite economy mission of the country, or what is happening now is just impulse reaction that will fade out sooner than later.
Meanwhile, the Vice President, Dr. Mahamudu Bawumia did warn against MoMo tax last year, indicating that MoMo is largely used by poor people to access financial services, so, it is the main driver of the financial inclusion agenda. Taxing MoMo, therefore threatens to lead to financial exclusion.
But the tax exempts the first ghc100 transacted in day as a pro-poor measure, and the Minister of Communications and Digitalization, Ursula Owusu-Ekuful has said that anyone who transacts more than ghc100 in a day is NOT poor, so, the tax cannot lead to financial exclusion.
Meanwhile, some industry groups have kicked against levy. The Ghana Chamber of Telecommunications says it is “ill-timed”; and the eCommerce Association of Ghana says it will be counterproductive to the industry and to the government’s own financial inclusion agenda.
The members of the Chamber of Telecoms have presented their concerns to government for consideration as part of ongoing engagement, while eCAG is also calling for an engagement with the finance ministry to discuss their concerns.
Meanwhile, the proposed tax is yet to be discussed in Parliament, and the Minority MPs have sworn to vehemently resist its approval and implementation.