Abolish E-Levy has been met with widespread approval

The previous decision by the NDC government, under President John Mahama, to abolish the Electronic Transfer Levy (E-Levy) has been met with widespread approval across the country.

For many, the E-Levy—introduced by the NPP government under President Nana Akufo-Addo—was viewed as an unnecessary financial strain on households already grappling with economic hardships.

The E-Levy emerged as a key focal point during the 2024 general election, not only due to its economic repercussions but also because of its significant impact on Ghana’s digital transformation efforts.

Consequently, both the NDC and the NPP’s flag bearers promised to abolish the E-Levy when elected into office.

Many Ghanaians, especially those operating within the informal sector, relied on mobile money for secure, convenient, and efficient transactions.

However, the E-Levy disincentivised the use of digital payments and risked reversing the progress made towards establishing a cashless society.

The ability to transfer money seamlessly—avoiding the risks and inefficiencies associated with handling physical cash—has empowered small businesses, improved financial inclusion, and boosted national productivity. Conversely, the E-Levy threatened to undermine this advancement.

Thus, its removal was a timely and necessary decision.

Millions across the nation expressed relief, hopeful for the return of more affordable and accessible mobile financial services.

Unfortunately, this sense of relief has proven to be fleeting.

Charges

In the wake of the E-Levy’s repeal, telecommunication companies and banks have rapidly implemented their own charges, many of which are as burdensome, if not more so, than the E-Levy itself.

Thus, this shift has merely transferred the financial burden from government-imposed taxes to private-sector fees, with little regulation or oversight involved.

For example, before the removal of the E-Levy, transferring funds from a personal bank account to one’s mobile wallet did not incur any costs.

Now, banks are charging a one per cent fee for such transactions, although with a ceiling.

Moreover, additional charges are being levied by telecom operators when users send money from their wallets or make payments.

These fees differ among providers, ranging from one per cent to as much as GH¢20 per transaction, with some telecoms imposing no maximum limits.

This situation means that a consumer conducting several transactions in a single day could end up spending significantly more than they would have under the E-Levy.

Lower fees

The rising costs present a formidable challenge to the country’s digital financial ecosystem.

The government’s choice to eliminate the E-Levy was not purely political; it was a necessary economic step.

Studies from various countries demonstrate that lowering or removing digital transaction fees encourages broader adoption of electronic payments, which fosters transparency, diminishes the informal economy, and stimulates overall economic activity.

Research by the International Monetary Fund (IMF), for instance, suggests that nations with lower digital transaction costs experience a surge in formal business activity, enhanced tax compliance, and accelerated growth in the digital economy.

In Ghana, where a substantial segment of the population remains unbanked or underbanked, mobile money has proven to be an invaluable tool for financial inclusion.

Small-scale farmers, market traders, taxi drivers, and street vendors depend on mobile money platforms for payments, secure savings, and purchasing goods and services.

Imposing excessive fees on these users risks pushing them back towards cash transactions, reversing years of progress.

Furthermore, digital transactions assist the government in monitoring financial flows, enhancing revenue collection through legitimate channels, and combating illegal activities.

By encouraging citizens to engage with the formal financial system, the country stands to benefit in the long term from improved economic data, which facilitates better planning and policy formulation.

It is, therefore, counterproductive to allow banks and telecommunications providers to levy unregulated fees that deter electronic transactions.

The risk of exploitation is evident.

While the government relinquishes potential public revenue by abolishing the E-Levy, private corporations are capitalising on the same consumer base without delivering corresponding public benefits.

Way forward

To address this growing issue, the government must act promptly and decisively.

First, there is an urgent need for dialogue among the government, the Bank of Ghana, telecommunications operators, and banking institutions to establish a standardised and equitable fee structure for mobile money and digital financial services.

It is essential to introduce caps on transaction fees, ensure transparency in pricing, and create mechanisms to prevent the duplication of charges.

Second, the government should consider implementing a regulatory framework specifically tailored for digital financial service charges.

Similar to utility pricing, these charges should be subject to regulatory approval to guarantee that they are reasonable, and fair, and do not impose undue burden on consumers.

By taking these steps, the government can help ensure that the future of digital financial services in Ghana is both sustainable and beneficial for all citizens.

Third, public education is key. Ghanaians must be made aware of transaction costs, differences among service providers, and how to avoid excessive fees.

Financial literacy can help citizens make smarter, cost-saving choices.

Ghana must also stay committed to a cash-lite economy, not just through infrastructure, but through policies that build trust in digital systems.

High fees risk driving users back to cash, undermining financial inclusion.

In conclusion, the repeal of the E-Levy should be more than symbolic—it must signal a shift toward a fair, inclusive digital financial future.

President Mahama’s government now has a chance to lead boldly and ensure innovation benefits all, not just the powerful.

The writer is a Political Scientist