With the repeal of the controversial E-Levy, the Bank of Ghana is now positioned to slash its skyrocketing costs on printing new currency. The move is expected to drive more digital transactions, reducing the need for excessive cash in circulation.
The E-Levy repeal is expected to boost digital transactions, reduce reliance on cash, and save the Bank of Ghana significant costs in printing currency
Among a number of the numerous benefits the repeal of the Electronic Transaction Levy (E-Levy) is expected to bring to the economy, it is emerging that the development could potentially reduce the cost of printing paper currency and minting of coins by the Bank of Ghana.
Thus, the Bank of Ghana is expected to make significant savings in the amount of money spent in issuing new currencies into the economy.
This was disclosed to Accra Street Journal in an interview with the Chairman of the Electronic Money Issuers Chamber (EMI), Dr. Ken Ashigbey.
Dr. Ashigbey commended the government for fulfilling its promise to repeal the controversial levy and hence boosting Ghana‘s digital transformation and financial inclusion.
Describing the levy as a “bad policy” that hinders the country’s digitization agenda, he indicated that successful digital economies worldwide do not impose taxes on electronic transactions, as such policies discourage adoption and stifle financial innovation.
He says, with the repeal, digital transactions will increase as people who found alternative means of money transfer to circumvent the levy will now come back on the digital platforms. Momo Agents Association has revealed that the levy caused about 37% of their customers to find alternative means.
“The repeal means, with more digital transactions, the demand for physical cash will decline, leading to the much-dreamt-about cashless economy. This means the central bank can cut back on printing more coins and banknotes, leading to significant cost savings,” he explained.
The BoG allocates substantial resources annually to print and distribute cash, which involves high costs in logistics, security, and wear-and-tear replacement. A reduced dependence on cash transactions, facilitated by a more robust digital payment ecosystem, could ease these financial pressures.
“I believe that it is good that the government has repealed this bad policy because if you have a country where you are trying to drive your digitization agenda, then you want to make sure that you do not bring a policy like this. If you go into countries that are promoting all of that, they do not put taxation on their transactions,” Dr. Ashigbey said further.
He continued: “What we are bound to see is that we are going to be seeing a lot of growth in this sector, and it is going to encourage a lot more people to use digital means in making payments. What that would mean is that the government itself would be able to count a lot of the transactions that are happening. The Bank of Ghana can also now cut back on minting coins and currencies. That would also be some savings.”
With the repeal awaiting the president’s final assent, industry stakeholders are optimistic about a rapid rebound in digital transactions and an overall modernization of Ghana’s financial sector.
As electronic payments gain more traction, the Bank of Ghana stands to benefit from lower operational costs while ensuring a more efficient and transparent financial ecosystem.
