Mobile money agents fear the worst following the passing of Ghana’s e-levy

Mobile money agents fear the worst following the passing of Ghana’s e-levy

As the workday ground to a halt on Tuesday, 29th of March, some Ghanaians closed wondering if there was any point in returning to their workstations the next day.

Of course, among these people, none of them were lawmakers. The latter had earlier in the day passed the now-infamous e-levy bill which targets all electronic transactions in the country.

The bill had been largely criticised as detrimental, especially for mobile money transactions which are critical to Ghana’s financial ecosystem. Even within the Ghanaian parliament, there were vocal disagreements over the bill. Some were incredibly heated like the infamous fight between lawmakers back in December. None of that mattered, however, as the bill was passed in curious circumstances with many members of the opposition missing from parliament.

The passed bill which recommends a mobile money tax of 1.5% for daily transactions above GHC 100 sees a reduction from the initially recommended 1.75%.

While the lawmakers returned to their homes, confident that they had done a decent job for the day,  a second set of people had to question the future of their livelihood. Mobile money agents have become commonplace in Ghana, a natural result of the country’s thriving mobile money sector.

Per Statista’s most recent data, there were at least 180,000 agents located in Ghana. These agents function primarily as cash-in and cash-out options for people who use mobile money. Some perform add-on tasks like transfers, paying bills, giving loans, etc. for users. For many people, these agents are the go-to source for speedy transactions. For the agents, charging commissions on transactions has been good business. That was until the levy was first announced in December 2021.

Despite the levy only getting passed in the last week of March, agents had begun to feel its effects since January. I reached out to 6 agents in Accra earlier in the month of March through an intermediary to get their perspective. While this is admittedly a small sample size, it gave some insight into the mood around the passing of the momo tax. All six agents said they have observed a remarkable decrease in transactions since January, as people steered clear of mobile money transactions in anticipation of the government’s decision.

“The announcement of e-levy has affected our business negatively because people started coming to withdraw all their money, some started to use cash. Daily transactions dropped significantly. The people are really against this mobile money tax” remarked Joyce, one of the mobile money agents we contacted.

The GHC100 cap has also had an effect on how people use mobile money. Elikpim, a 19-year old, mobile money agent in Accra, shared that people had panicked and removed most of what was in their accounts and were only using mobile money for minor transactions.

These developments might prove challenging for the government which is looking to raise nearly $1 billion from the taxes. A drop in transaction volume will definitely affect projected government revenue.

While projected government revenue is a speculative discussion, a more present concern is the earning power of mobile money agents. All 6 agents we spoke to noted that they had seen a decrease in their monthly earnings. Three of the agents shared their average earnings before and after the mobile money tax was proposed in parliament. Among those three, average monthly earnings dropped by nearly 60%.

One of the agents who works as a contract staff for a super-agent also mentioned that since the proposed bill became a topic, he had been experiencing delays in his salary payment.

All six showed concern for the situation, expecting it to get worse with the recent passing of the bill. One of them, 19-year-old Elikpim, revealed that she may quit the business once the e-levy is passed as income is expected to dwindle. The same can be expected of thousands of mobile money agents across Ghana who are typically lower to middle-income people. Curiously, one of the government’s proposed uses for the money raised would be to battle unemployment. It is rather ironic that in a bid to create jobs, the government might be inadvertently causing people to lose the ones they already have.

Parting thoughts

The full effects of the mobile money tax are yet to be seen, but the early signs are dire. Job loss, dwindling income, and an uncertain future are realities that thousands of mobile money agents may have to contend with over the next few months.

The policy, its lack of popularity, and the way it has been shoved on millions of Ghanaians give the impression of cutting off the head to cure a headache. Eventually, it will be up to the Ghanaian government and people to decide if it was worth it.