E-Levy Bill; Cardano Blockchain can Save Mobile Money Transaction Cost in Ghana

Africa’s private sector is characterized by informal activities. The private informal sector is one of the huge sectors. This can be associated with the regulatory challenges and their inabilities to afford to hire professionals to properly document business activities of the informal sector. In Ghana, the private sector employs 92.5% of the economically active population with the majority being in the private informal sector, according to the Ghana Living Standard Survey[1].

The Government of Ghana despite its failed effort in developing the private sector is trying all it can to capture the sector in the tax net.

Unfortunately, Government is a level 4 spender and that means, spending other people’s money on someone else. The level 4 spender is inefficient in neither knowledge nor budget. You do things with little idea of whether it will benefit those it spends on. You waste money and have no incentive to stop spending. The government and all government welfare programs are best fit level 4 spender.
Adam Smith opined that’there is no art which one government sooner learns of another than that of draining money from the pockets of people’.

The emergence of Fintech however, has seen a huge rise in financial inclusiveness in the developing world thus providing a platform that requires less documentation for an individual to transfer and receive money with just few steps on a mobile phone.

Ghana like other developing worlds has benefited from mobile money with platforms including MTN MoMo, Voda-Cash, Airtel-Tigo Money, G-money, Zeepay among others. This platform has done most to integrate the informal sector to do business transactions with ease.

It is important to note that mobile money transactions come at a fee thus $0.082 (GHS0.50) on every $8 (GHS50.00) one sends, withdraw, or transfer. Therefore, customers pay more in transactions based on the amount being transferred. This is certainly not the case on Cardano and other blockchains because the amount being transferred is not a determinant of the gas fee.

The convenience of mobile money platforms facilitated huge adoption. With recent financial sector clean-up that saw many traditional banks collapsing and customers losing their deposits, the Ghanaian citizens have grown trust for mobile money platforms than banks because of the easy and convenient access to money, with less documentation. One needs just a Voter’s ID card to deposit or for withdrawal and absolutely nothing when transferring.

Between 2017 to 2021, mobile money transactions increased from GHS155 million to GHS986 million Ghana cedis[2]. This has attracted the government to expand its tax net to mobile money transactions. The E-levy set out on page 74 of the budget statement specifically outlines the introduction of a 1.75% levy on electronic transactions covering mobile money payments, bank transfers, and merchant payments, and inward remittances.

More recently, the Finance Minister has presented the Electronic Transfer Levy Bill, 2021 (E-Levy) to the parliament of Ghana that would impose 1.75% on every transaction if it is passed[3]. The bill imposes a 1.75% tax set out in the first schedule on Electronic Money Issuers, Payment Service Providers, Banks, Specialised Deposit-Taking Institutions, and Other Financial Institutions prescribed by the Regulation made under the Act.

Section 2 of the E-levy bill exempts the cumulative transfer of $15 (GHS100.0) made per day by the same person, transfer between the accounts owned by the same person, electronic payment for taxes, fees, and charges to government, specified merchant payment, and transfer between a principal, agent and master-agent account.

What is more intriguing is that the bill defines a merchant as ‘a commercial establishment which has been registered with the Ghana Revenue Authority for income tax and value-added tax purposes’.

Merchants originally do not pay any charges because they are the local corner shops where anyone can easily stop to deposit money on various mobile money platforms. The bill focuses solely on taxing everything out of the informal sector.

The government has done little to formalize the informal sector in Ghana, however, wants to seize the opportunity to tax everything out of it.

Introducing E-levy goes contrary to fundamental principles of taxation. Taxation must not be discriminatory. In this sense, E-levy is discriminating between those who use electronic transactions and those who don’t. The E-levy bill is doing exactly so in a very aggressive and regressive approach.

In addition, taxation must be neutral, that is not affecting individual decision-making. The E-levy would affect individuals’ decisions hence making individuals decide whether or not to use electronic transactions for their economic interactions and payment.

The risk here is that the E-levy will make a lot of individuals return to the cash economy. One trite developing countries, including Ghana, are known for and this has a huge tendency of deepening security woes in Ghana. Armed robbers could easily attack traders carrying loads of cash for their daily business activities.

In a recent publication by TV3 news[4], MTN and Airtel-Tigo have agreed to reduce the original charges (($0.08 per every $8) to cushion customers. This is mobile money provider’s response to the E-levy bill. However, based on tax elasticity, customers would respond hugely with time by reducing to a minimum their activities on mobile money platforms.

Interestingly, Cardano blockchain is a revolution with immense benefit to the developing world of which Ghana is part. Imagine if telecommunication (Telcos) giants in Ghana can migrate mobile money transactions on Cardano blockchain building unique Dapps. This would be mean a lot to individuals in Ghana and to avoid the risk of robbery and going back to a cash economy.

The migration of mobile money on the Cardano blockchain would hugely increase adoption and contribute to achieving digitization efforts in Ghana. This is because transaction on the Cardano blockchain is cheap only to cover the cost of processing and storing the transaction. Averagely, it cost $0.3 as a transaction fee and does not depend on the volume of transactions.

One could transfer $1,000 or $1,000,000 at the same cost of $0.3 on the Cardano blockchain[5]. The situation varies on mobile money where it would cost $9.85 to transfer $1000, and the cost increases depending on the amount being transferred ($0.08 per every $8).

More so, Cardano blockchain has proof of stake algorithm that randomly selects slot leaders and pays out Cardano fees as rewards. This would bring benefits to mobile money providers in Ghana and customers, allowing individuals to engage in their business activities at a lesser cost.

The Government of Ghana has a target to raise GHS6 billion from E-levy for the year 2022. It is also stated in paragraph 318 of the 2022 budget statement that, a portion of E-levy revenue would be used for entrepreneurship (YouStart Initiative), Cyber Security, Digital, and Road infrastructure. Developmental projects in Ghana rely heavily on loans from the International Monetary Fund (IMF), European Investment Bank (EIB) and World Bank, therefore, it would be difficult for the public to trust the government with E-levy spendings. Ghana’s debt stock hits GHS332 billion with a debt to GPD ratio of 76%.

If the government is unable to meet its target, the solution would be more taxes.

Unlike the government, blockchain is open and easy to track the improvement on the chains. It would be easy to verify and track the improvement on the Cardano blockchain. Determinants of Cardano fees according to developers depend on;

Expense of a Single Computer Byte

Average Transaction per Second

Average Transaction Size

Cost of Running a Full Node

What is more amazing is that Cardano fees are flexible and respond to market conditions. It means, in the future, as the price of ADA increases, cost per transaction can relatively become steady and reduced.

In all, telcos giants should consider migrating mobile money transactions to the Cardano blockchain to enable them to constantly serve their customers at a lesser cost in Ghana.

Author: Nathaniel Dwamena

He is the Executive Director at Institute for Coin Liberty and engages in activities that promote free market, property right and blockchain advocacy in Ghana. He is also the Co-Founder, Young Africans for Opportunities, R&D Manager at Institute for Liberty and Policy Innovation (ILAPI), Community Advisor and Member, WADA-Ghana.


[1]Ghana Living Standard Survey, 2017

[2]Ghana’s 2022 Budget Statement.

[3]Electronic Transaction Bill, 2021

[4]TV3 News, 2021, ‘E-Levy: MTN, AirtelTigo agree to reduce charges to cushion customers’ retrieved from https://3news.com/e-levy-mtn-airteltigo-agree-to-reduce-charges-to-cushion-customers/

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