Government Initiatives and Policy Changes in Q1 2025: The Mahama Administration’s Economic Reset
Introduction
The first quarter of 2025 has been a transformative period for Ghana’s economic landscape under President John Mahama’s administration. In a bold move to stimulate business growth and ease financial burdens on citizens, the government repealed several controversial tax policies, including the Electronic Transfer Levy (E-Levy) and the Betting Tax. These changes, along with new fiscal strategies, are expected to reshape Ghana’s economy, with significant implications for businesses, investors, and ordinary citizens.
Key Policy Changes in Q1 2025
1. Repeal of the Electronic Transfer Levy (E-Levy)
One of the most widely debated policies in Ghana’s recent history, the E-Levy, which imposed a 1% charge on mobile money transactions and electronic transfers, was officially scrapped in April 2025. This decision was in line with Mahama’s campaign promise to abolish the tax, which had been criticized for stifling digital financial inclusion and increasing transaction costs for businesses and individuals.
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Implications:
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Increased mobile money transactions and digital payments.
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Boost for small and medium-sized enterprises (SMEs) relying on mobile money.
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Reduction in cash-based transactions, improving financial security.
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2. Abolishment of the Betting Tax
The betting and gaming industry in Ghana had been under intense scrutiny due to the implementation of a 10% withholding tax on winnings. With its removal, the government aims to restore confidence in the sector and prevent capital flight to offshore betting platforms.
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Implications:
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Increase in local betting and gaming industry participation.
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Possible rise in tax revenues from betting companies rather than individuals.
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Renewed concerns over gambling addiction and responsible betting practices.
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3. New Corporate Tax Adjustments
To encourage business growth, the government introduced tax relief measures for SMEs and startups, lowering the corporate tax rate from 25% to 20% for new businesses within their first three years. This is expected to drive entrepreneurship and attract foreign investment.
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Implications:
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Encourages new business formations and job creation.
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Boosts Ghana’s attractiveness as an investment destination.
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May lead to short-term revenue losses, but with long-term economic gains.
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4. Fuel Subsidy Restoration
To mitigate the rising cost of living, the government reintroduced partial fuel subsidies, reducing petrol and diesel prices at the pump. This policy aims to ease transportation costs for businesses and consumers.
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Implications:
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Lower transportation costs, benefiting commuters and logistics companies.
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Potential strain on government finances if global fuel prices increase.
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Mixed reactions from environmentalists advocating for sustainable energy policies.
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Impact on Accra’s Residents and Businesses
The removal of these levies and introduction of new policies have been met with widespread public approval, particularly among traders, digital entrepreneurs, and young people involved in the gaming industry. However, economists caution that the government must find alternative revenue sources to maintain fiscal balance.
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For Businesses:
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Increased cash flow for SMEs previously burdened by high transaction costs.
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Better incentives for startups, making Ghana a more attractive business hub.
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Possible inflationary pressures due to increased consumer spending.
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For Citizens:
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Higher disposable income due to lower transaction and fuel costs.
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Potential rise in consumer spending, boosting the retail sector.
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Concerns over the potential for increased gambling habits among the youth.
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Our Take:
The first quarter of 2025 has set the stage for significant economic shifts in Ghana. President Mahama’s tax reforms and policy changes signal a pro-business and citizen-focused agenda aimed at reducing financial strain on individuals and enterprises. While these policies offer immediate relief, the long-term sustainability of government revenue remains a key concern. Stakeholders will be closely monitoring how these changes impact the nation’s fiscal health and economic growth in the coming months.
Last Updated on April 3, 2025 by samboad
