Ghana’s unpopular MoMo tax hits Botswana’s Letshego hard
Botswana Stock Exchange-listed pan-African financial services group Letshego’s mobile micro lending unit took a hit in 2022 financial results due to a disliked tax imposed on mobile money transfers in Ghana.
Letshego’s mobile loan book decreased by 26% year-on-year to P421 million, compared to a mobile loan book of P568 million in the previous year.
Ghana announced an unpopular electronic levy (e-levy) on mobile money transactions in May 2022 and it took effect from 11 January this year.
The Ghana government implemented the levy to enhance domestic tax mobilisation and expand the tax base, saying it is providing “an opportunity for everyone to contribute towards national development.”
E-levy is collected by Ghana Revenue Authority through licensed banks, specialized deposit-taking institutions, payment service providers, and electronic money issuers.
Once the tax came into force, the International Centre for Tax and Development, Institute of Development Studies says, users panicked, systematically withdrawing cash from their mobile-money accounts.
According to the institute, the reform has also changed the money-transfer habits of some users who are increasingly reverting to traditional means such as using cash.
Resultantly, companies like Letshego, and mobile operators like MTN and Vodafone who had been growing their mobile money offerings took a hit.
“The mobile loan book decreased impacted by the introduction of a levy on mobile money transfers in Ghana on telco operators,” says Aupa Monyatsi, Letshego’s Group chief executive.
He notes the impact of the levy was huge on the company, as Ghana has the largest portfolio for mobile micro lending in the group.
Notwithstanding, the dent on mobile loans, Monyatsi says, the Group continued to focus on digital adoption, as 73% of all Letshego loan customers used one form of the Group’s digital channels, whilst 22% of loan customers solely used the digital mall for their loan applications in 2022 financial year.
Also, the company is migrating 205 000 of its traditional channel customers to the digital mall platform.
“The Group generated over P206 million revenue from the platform as we continue to increase digital penetration for lower cost of acquisition.
“Letshego will further continue to focus on monetising our offerings on the digital mall and broaden access with a revamped LetsGo@Work employer and employee proposition, which supports government and non-government sectors.”
Looking ahead, Monyatsi says the company’s Digital Mall product expansion remains a priority in all markets, with digital insurance proving its strong upward potential.
In 2022, the Group launched mass mobile loans in Uganda and Botswana and this year the company aims to launch in Lesotho, Tanzania, Kenya and Nigeria.