The Effect of the Electronic Transaction Levy (E-Levy) on Retail Digital Financial Services in Ghana

This paper examined the effect of Ghana’s Electronic Transaction Levy (E-Levy), introduced in May 2022, on retail digital financial services, focusing on mobile money agents and small non-bank financial institutions. Drawing on data from 2,908 urban-based micro-enterprises across Ghana, we analyzed how the levy affected business operations, turnover, client base, and financial inclusion outcomes. The findings demonstrate an immediate and substantial decline in both mobile money usage and average turnover following the levy’s imposition, with the most pronounced effects among low-income individuals, small businesses, and vulnerable groups. Despite a partial rebound in transaction volumes and turnover by early 2023, the recovery remained uneven; many enterprises, especially female-owned and those in specific regions, continued to face challenges. The study also documents widespread adoption of avoidance strategies by businesses and consumers to minimize exposure to the levy, alongside operational difficulties such as network failures and e-float management. Insights from key informant interviews reinforce these trends. The research underscores the need for regular policy review, increased exemption thresholds, improved public education, and targeted support for vulnerable groups to achieve a balance between revenue mobilization and digital financial sector growth, offering relevant lessons for other countries considering similar levies.