Panic Withdrawals Hit Mobile Money- The Dangers and Gruesome Consequences Of The Government's Action

On 17th November 2021, the Minister for Finance announced during the presentation of the 2022 Budget Statement and Economic Policy of Government to the Parliament of Ghana, the introduction of an “Electronic Transaction Levy” or “E-Levy” of 1.75 percent on electronic transactions above GHs 100 (US$16) per day to take effect from 1st February 2022. The levy will be applied to mobile money payments, bank transfers, merchant payments, and inward remittances (MoF 2022 Budget Highlights).

            Ken Ofori Atta (Image from citinewsroom.com)

In spite of all the negative recognition that this policy received, with economic and financial experts advising the government on the negative effects of this levy on citizens and the economy as a whole, in March 2022, Ghana's Parliament approved the bill with 1.50 percent taxation on electronic money transfers. 

Ghanaians, realizing that this fiendish policy is merely a double taxing of their money have resulted to boycotting mobile money and keeping their physical cash on them. This was made known when research revealed that, a whooping 10million dollars had been withdrawn between November 2021 and January 2022; barely 3months after the announcement. That notwithstanding, an 'arrogant' government (who had initially, collapsed 20 percent of Ghanaian indigenous banks causing a huge loss of money to the country and individuals, thus, deferring trust of Ghanaians in banks) went ahead to push this bill and have it approved. 

During the discussion phases of this policy, experts like Senior lecturer at the University of Ghana Business School, Dr. Vera Fiador predicted the consequences of implementing this policy.

“Chances are high that the revenue target from the mobile money will not be achieved. From what is going on, by the time they are ready to implement the taxation, most people who can do without the mobile money will hive off. The net effect on small businesses will be huge, and so we are going to find a lot of them doing cash transactions now. People will walk into the banking hall, cash their money or use the ATM and pay over the counter,” she said.

This comment, coupled with what is happening goes to suggest that. the government's projected $6billion dollars will not be achieved and collapse of the mobile money is imminent. This will deal a huge blow to a nation that aims at developing a cashless economy; a policy that was launched by this very government’s economic team.

 

The dangers of this withdrawals and a revert to ‘cash’ economy are dire than probably the government understands. Business men and women who want to avoid double taxing risk carrying huge sums of money on them thereby being at the mercy of tricksters, thieves and robbers.

The queues in banking halls will get longer as if it has not already begun.

 

According to the Summary of Economic and Financial data (March 2022) published by the Bank of Ghana, the mobile money platform has never seen such a colossal decline in value over the space of any two months within a year ever since it was introduced except that which occurred between November 2021 and January 2022.

Besides the drop in value on the platform, the total number of transactions also went south as it saw a 24 million decline in January 2022 from November 2021. The number of active agents also saw a decline of 7,000 within the same period, while active mobile money accounts also decreased by 600,000 in the period under discussion.

These statistics which is not heeded by ‘the men in position’, probably because they do not understand them (as it was in the case of the banking crisis) simply means loss of jobs. Several mobile money agents (about 7000) in two months, lost their jobs. This is expected to continue and lead to the loss of several more jobs just as it happened between 2017 and 2018 in the banking crisis.

There is no doubt about the fact that the country needs money to develop, but taxing every aspect of the citizen’s life to raise fund for development is a lazy man’s approach to nation building. However, that is what you get when you have an incompetent leader or probably, when Nana Addo said (yƐte sika so…), he was referring to the monies in our mobile money wallet.