An Economist, Dr. Isaac Doku, believes the drop in the value of MoMo transactions in December last year may be a signal that rational consumers have started mapping out strategies to avoid the use of Mobile money.

According to him, this should be a strong signal to the government that it may not achieve its intentions if it should introduce the levy on electronic transactions.

“Consumers are rational and will always map strategies to avoid the said e-levy. This is a signal to government that they will achieve nothing by imposing e-levy. They may struggle to raise up to 20 percent of the revenue they expect to generate from that policy”.
Dr. Isaac Doku

The Lecturer at the University of Education, Winneba, told the Vaultz news that the government has failed to recognize that consumers are rational and insisted that the “e-levy is a tax you can plan and avoid easily”.

The total value of Mobile Money (MoMo) transactions suffered a dip in December last year despite a strong rise at the beginning of the fourth and final quarter of 2021.

According to recent data from the Bank of Ghana (BoG), the value of MoMo transactions declined by GH¢3.2 billion between November and December 2021. The total value of transaction declined to GH¢82.9 billion in December 2021, down from GH¢86.1 billion in the previous month.

Even though there was a decline in the total value of transactions, the number of transactions rose to 401 million in December 2021, the highest number recorded so far.

Possible impact of proposed E-levy

The data further revealed that despite a rise in the number of registered mobile money accounts from 47.7 million in November to 48.3 million in December 2021, there was a declined in the number of active users of the service in December last year. Active mobile money accounts slumped to 17.9 million in December 2021 from 18.0 million in November.

Hence, the data show that there was both a fall in the number of active MoMo users as well as the total value of MoMo transactions in the last month of 2021. This came after the government announced its intention to impose a levy on electronic transactions.

Unlike Dr. Doku, an Economist, Mr. Michael Minlah, said “I seriously doubt” if the proposed E-levy has had an impact on the decline in the value of MoMo transactions. The Lecturer at the University of Professional Studies (UPSA) explained that this was because “the economy is generally hard. People are not sending money again”.

Meanwhile, Deputy Finance Minister, John Ampontuah Kumah, said in a recent interview that government is expecting about a 24 percent drop in Mobile Money transactions after the introduction of the E-Levy.

“The research we did also told us that there will be about 24 percent attrition rate in the three months to six months that we will introduce it. The research same told us what should be done to bring back these people after a while, and we have all these things in place”.
Hon. John Ampontuah Kumah

The Ejisu legislator assured that government has a plan in place to undertake a lot of education on the controversial 1.75 percent charge on the electronic transactions which is still yet to be approved by Parliament. The Minority in parliament insists it will not accept the proposed reduction of the rate to 1.5 percent by the finance minister.

Performance of MoMo last year

The data show that MoMo experienced a consistent rise in the number of transactions throughout last year.

Compared to 2020, the number of MoMo transactions went up by 100 million in 2021, up from 301 million recorded in December 2020.

Generally, MoMo transactions experienced a strong growth in 2021 compared to the End-year value of GH¢67.7 billion in December 2020. This means that the value of MoMo transactions in the country rose by 15.2 billion, a growth rate of 22.5 percent.

In 2021, the value of MoMo transactions hit its highest levels of GH¢99.1 billion in July but declined to GH¢81.8 billion in August. It suffered a decline for the second consecutive month in September, when its value dropped by GH¢10.1 billion to hit GH¢71.7 billion.