Ghana’s e-levy on electronic financial transactions, approved by the country’s parliament, will now be taxed at 1.5% instead of the earlier stated 1.75% and is likely to impact mobile wallet values and volumes.

The new levy was approved last week, effectively adding Ghana to an exclusive list of African countries with similar levies including Cameroon, Tanzania and Zimbabwe.

While economists like Christopher Bertsch have described the new levy as “highly unpopular” in the West African country, Nana Akuffo Addo’s government is pushing ahead with the tax, stressing that it will help raise funds for the state.

“It is understandable that the government needs to find ways to raise taxes in an economy that is largely informal. The total mobile money transaction volume was US$81-billion in 2020,” said Bertsch.

Electronic transactions include inward remittances, P2P mobile transactions and bank transfers as well as Point Of Sale and merchant payments.

The e-levy was first announced in December 2021, and Ayobami Omole, research analyst for emerging markets advisory company, Tellimer said in a report on Monday that “mobile money transaction volume and value (have) declined by 7% and 8%” respectively, in January.

Media reports over the weekend showed Ghanaian mobile money users rushing to withdraw funds from their mobile wallets after parliament passed the levy last week.

Addo is expected to give presidential nod to the mobile money tax before it becomes effective in the next few weeks.

Tellimer expects “to see a short-term decline in transaction volume and value before consumers adjust to the new levy and/or operators are forced to further reduce” charges.

For Bertsch, possible implications of taxation on mobile money payments and bank transfers in developing countries such as Ghana include stronger adoption of cryptocurrencies such as stablecoins.

These digital currencies are already popular in countries such as Zimbabwe and Nigeria which have currency stability challenges. Zimbabwe already has a 2% intermediated mobile money tax on electronic transactions.