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FULL TEXT: Finance Minister speaks on E-Levy, economy


1. Good Afternoon and a Happy New Year to you all. I thank you for your time and presence today and for the opportunity to address you.

This event marks the first Press Conference by the Minister for Finance in the New Year, and I pray that the year will bring us happiness, peace, and prosperity to all of us across the country.

2. This prayer seems improbable now with Fitch’s downgrade; the devastating exit of the Black Stars from the ongoing AFCON, the impasse in Parliament about the E-Levy and despondent citizens concerned about the economy.

Thankfully, some market watchers (referencing Bloomberg) have corrected the inaccurate representation of the strength of our economy. That “opening in the cloud” confirms our confidence in our strategy.

3. 2022 promises to be an exciting and eventful year for our country as we seek to build on our collective successes and promote stability and equal opportunities for our people. Let us, as a nation, gird our loins as “trees of righteousness” and the Lord will guide us to also bring the wealth of nations to ensure prosperity for all.

4. For us as Government and the Ministry of Finance, we remain unwavering in our commitment to build a sustainable entrepreneurial nation and growth inclusive strategy of social justice and social mobility; promote investment; manage a sustainable debt programme; build our infrastructure and create jobs. We, guided by the President, went ahead of most nations in initiating a transformation programme in the heat of the pandemic.

5. This year, we have set out our plan in the 2022 Budget to implement a coherent and comprehensive strategy that delivers extended opportunities for all Ghanaians through four distinct and essential components:

i. increased resource mobilisation;

ii. prudent expenditure management;

iii. job creation through industrialisation, agriculture, and regional hub strategy on the back of AfCFTA; and iv. skills training.

6. These four policy focus areas taken together, go to the heart of accelerating our efforts at fiscal consolidation, promoting growth and strengthening our medium-term prospects and debt sustainability in tackling the behemoth of unemployment, especially among our youth. Rebounding from the COVID-19 Pandemic.

7. Last year, together, we made a lot of progress in our recovery effort after the devastating impact of the COVID 19 pandemic on our economy. Our GDP grew at a provisional 5.2% ( in the first three quarters of 2021) and we continued to focus on improving the lives of our people.

This compares to IMF estimates of 3.7 percent for SSA, and 3.6 percent for ECOWAS.

8. As the end of 2021, we had:

a. Exceeded our domestic tax revenue target for 2021 by 0.5% and are well on course to exceed our GDP growth target of 5.0% for 2021 as well;

b. Sustained financing for Government flagship programmes. Resulting in:

i. 1.26 million people benefitting from Free SHS;

ii. 3.45 million pupils covered by school feeding;

iii. 100,000 young persons employed under NABCO;

iv. 344,023 households being given a lifeline under the LEAP programme; amongst others and continue to be funded Three Preceding Years of Stability: 2017-2019

9. Ladies and Gentlemen, the rapid post-pandemic rebound is as a result of the economic turnaround programme and the solid foundation we built between 2017 and 2019, marked by:

a. an annual average of 7 percent economic growth rate between 2017- 2019 from 3.4 percent in 2016;

b. containing the fiscal deficit below 5 percent of GDP for three consecutive years;

c. restructuring the banking sector by spending GH¢21.6 billion to protect the savings of 4.6million depositors and 81,700 investors;

d. reducing Inflation rate from 15.4 percent in December 2016 to 7.6 percent (estimated at 12.2% in Nov. 2021 attributable to pressures on global supply chain due to the COVID-19 pandemic).

10. However, by end-April 2020, the outbreak of the COVID-19 pandemic disrupted our progress. The cost of saving the lives and livelihoods of Ghanaians during the pandemic has been enormous.

With revenues drastically reduced by GH¢13,404 million and unplanned COVID-related expenditures rising by GH¢11,788 million public finances were stretched. In fact, our management of the COVID-19 Pandemic has received worldwide acclaim and these expenditures may account for the relatively low mortality rates (Total deaths in Ghana of 1,350 out of 235,210 for Africa as of yesterday 18th January 2022).

11. We had to mobilise additional resources which included borrowing. This compounded our already stretched finances, from having had to undertake the financial sector clean-up (GH¢ 21.6bn) and payments to IPP, fuel suppliers and energy sector SOEs of GH¢26.4bn as at 10 November 2020.

12. To mitigate the impact of the COVID pandemic, Government immediately a. recruited additional 24,285 health professionals, provided 3.6 million reusable face masks, 50,000 medical scrubs, 90,000 hospital gowns and head covers to health facilities as at June 2020;

b. rolled-out the GH¢750 million CAP-BuSS Programme in May 2020 to directly support Micro, Small and Medium-Sized Enterprises (MSMEs) to 302,001 MSMEs and to save 768,184 jobs;

c. provided cooked meals to 2,744,723 vulnerable persons and worked with Faith-Based Organisations to distribute dry food packages to 470,000 families;

d. supported household electricity (4,772,512 customers) and water (10.2m urban dwellers alone) subsidies for all Ghanaians;

e. spent GH¢1.9bn to ensure that our children and teaching staff at all levels return to school safely and save the year as they were able to sit for their BECE and WASSCE Exams with historic results.

13. We did all these whilst still protecting and paying for the flagship programmes including the Free SHS, NABCO, Nurses and Teacher Trainee allowances, 1D1F, Planting for Food and Jobs, Road infrastructure, and Railways development, amongst others.

2022 and Beyond

14. We will continue with our recovery efforts from this pandemic in 2022. With a growth target of 5.3%, anchored around our GH¢100bn GhanaCARES ‘Obaatan pa’ programme, we remain unwavering in our commitment to promote inclusive growth, encourage investment and raise the standard of living for our citizens.

15. This year, we have outlined in the 2022 Budget our plan and strategy to deliver opportunities for all Ghanaians in creating an entrepreneurial Nation. The 2022 Budget enables us to stabilise the economy and address the greatest challenges of our time; that is the triple helix of Debt, digital and physical Infrastructure deficit (especially Roads) and Unemployment.

Indeed, the indignity of our youth sitting at home unemployed must be eradicated. Youth unemployment is not a statistic; its is real lives of Ghanaians like you and I and no one should hide his and her head in the sand.

Backdrop for the Introduction of the E-Levy

16. Ladies & Gentlemen, with that background, let me share with you why we need the E-Levy, which is one of the key tax measures of our 2022 Budget, and why it is important to our lives as Ghanaians and achieving our aim of moving beyond Aid.

Our revenue to GDP ratio has languished between 11.3 percent in 2016 to 12.5 percent in 2021 compared to 16 percent to 20 percent with our neighbours, also our VAT revenue at 11 – 13 percent compared to 18-44 percent of peers.

17. Clearly, this is an unsustainable way to anchor the extensive transformation agenda (articulated in our GhanaCARES ‘Obaatanpa’ Programme). This is further compounded by the fact that out of the total population of 30.8 million only about 2.4 million people pay personal income taxes.

18. The question is: what is the most efficient way to bring all Ghanaians into the tax net to build a Ghana Beyond Aid that we and our children and grandchildren will be proud.

19. The most efficient way must take into consideration technology and the structural changes in the tax handles, the fact that we have over 40.5 million mobile phone subscribers and over 17.1 million active mobile money subscribers.

It is instructive to note that the total value of transactions on mobile money grew by a CAGR of 65% between 2016 and 2021; rising from GH¢78.5 billion in 2016 to an estimated GH¢953.2 billion in 2021.

20. Over the past few months, I have made several references to “Burden sharing”. Essentially, we are at the stage in our national development where we must all play our part and all put our shoulders to the wheels

a. Where Greater Accra is responsible for 90 percent of revenues;

b. Where some 60,000 professional do not pay direct taxes;

c. Where property taxes do not exist;

d. Where the wealthy talk about regressive taxes to detract from their non payment

21. We simply cannot build forward better with a system where everyone takes, and most do not give back.

22. The two major sources of income to pay for expenditures for any government are taxes and borrowing. The balance will tilt one way or the other depending on the capacity to mobilise revenues.

The ability to close loopholes and the willingness for all citizens to be protectors of the public purse and our capcity to prosecute offenders. Unfortunately, we have paid the price for low resource mobilisation through insufficient investment.

23. The public sentiment out there is clear: Ghana must collect its taxes to avoid debt accumulation, build our roads, and get our youth to work.

So we collect, we pay, we account for it, we discourage our neighbours from avoiding taxes and burden-share. If we are to do so and still achieve our ambition towards rapid development to expand the economy to create jobs and prosperity for the masses, then the project of burden sharing for shared prosperity must be embraced by all.

24. The consequences, relative to our peers, we have invested less in infrastructure. Between 1961-2020, Ghana’s average Gross Fixed Capital Formation Ratio was 17%, compared to 25% in sub-Saharan Africa.

Moreover, between 2017 and now our tax to GDP has hovered between 11%- 13% compared to our peers who were between 16%-20%.

25. We are paying the price for low resource mobilisation through insufficient capital investment. As such, we have had to borrow more than others to finance some of the investment in infrastructure and the provision of social services and security.

26. Our current expenditure pattern is motivated by our unwavering commitment to the sovereign rights of our people to social justice and social mobility.

Between 2017 and 2021, key expenditures have been as follows;

a. Education approx. GH¢50 billion,

b. Health approx. GH¢20 billion,

c. Security approx. GH¢20 billion (excluding National Security),

d. Other Flagships about GH¢15 billion; and

e. Agenda 111

27. In 2016, Compensation, Interest Payments & Statutory Funds comprised 141.3% of Tax Revenue. As of the end of 2021, we estimate that this stood at 146.5% of Tax Revenue. This reflects the constraints on Government’s ability to embark on major transformational projects, without resorting to borrowing.

28. However, this Government, which is a Centre-right Government, has amply demonstrated our commitment to responsible custodianship of resources and sovereign rights of its citizens.

29. Pre-pandemic, the fiscal deficit declined from 6.5% in 2016 to 4.8% by 2019. Last year, we set a target of a 9.4% deficit. As at end-November, we were virtually on target.

The significance of this must not be lost on us. It means that the finances of our country is not rudderless. It means there is deliberateness, care, compassion and forbearing. It means there is accountability. It means the economy is being managed well. This is the true story.

30. Will we go through difficulties? Of course, we will. But honestly, show me any government that has done so much in so little time.

31. We are also on target to exceed our GDP growth target of 4.4% for 2021 based on third-quarter statistics and our domestic tax revenue target of GH¢57.3bn for 2021. Our comprehensive agenda to increase revenue mobilisation while reducing fiscal slippages/leaks is on course through RACE.

32. Ladies & Gentlemen, the E- Levy is a necessary tool to increase our Tax to GDP from circa 13% to 16% and above guarantee that we all pay. The E-Levy would not only ensure that we move towards a more sustainable debt level but would also ensure that we have the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure.

The E-Levy also provides a means for all Ghanaians to help support their country and grow this economy as compliant citizens giving to Caesar what belongs to Caesar.

33. Undeniably, Digitalization is eroding the traditional resilience of brick and mortar enterprises. With fewer transactions happening across the counter, there is an increased risk that some of the standard revenue generation and tax measures will gradually become obsolete.

34. Indeed, except for Excise duties, the various tax types experienced a marked decline in growth between 2019-2020. Domestic VAT, for instance, which has traditionally been a significant component of Ghana’s tax framework, increased by 3% between 2019-2020, compared to 29% between 2018-2019.

Indeed, it is clear that Government must adopt a revenue mobilisation approach befitting the evolving digital age.

35. Thus, the E-Levy was borne out of a careful study of current trends in this rapidly evolving digital age and is specific on the transactions on which it will be applied.

36. Following the presentation of the budget on November 17th and the discussions that followed, we have had extensive stakeholder engagements including Parliament, representatives of FBOs, the Banks and Chamber of Telecommunications, Civil Society Organisations, and I have had smaller intimate conversations with citizens across a few constituencies in Ghana.

The various concerns have been heard and we have found a way to address these concerns without an adverse fiscal impact.

37. True to the spirit of burden sharing, the Telcos have agreed to reduce their charges by 0.25% to reduce the overall net impact of the levy on subscribers.

We want to take this opportunity to thank our friends in the Telecom Industry and we believe that by this measure, we can raise the requisite resources to bolster our fiscal position while keeping an eye on transaction costs and consumer welfare and reducing the impact on the average Ghanaian and keeping the resources required for our growth agenda.

38. After extensive consultations, the E-levy will be re-submitted to Parliament this month. We look forward to joining hands with our Honourable Members of Parliament to approve the E-Levy on a consensus basis so we can collectively address the big issue of unemployment.

39. Let me be clear today. The E-Levy will cover:

a. Mobile Money Transfers between accounts on the same electronic money issuer (EMI);

b. Mobile Money transfers from an account on one EMI to a recipient on another EMI;

c. Transfers from bank accounts to mobile money accounts;

d. Transfer from mobile money accounts to bank accounts; and

e. Bank transfers on a digital platform or application which originate from

a bank account belonging to an individual to another individual.

40. I emphasise that E-Levy will Not impact:

a. Cumulative transfers of GHS 100 per day made by the same person;

b. Transfers between accounts owned by the same person;

c. Transfers for the payment of taxes, fees, and charges on the platform;

d. Electronic Clearing of Cheques;

e. Specified merchant payments (i.e. payments to commercial establishments registered with GRA for Income Tax and VAT purposes); and f. Transfers between principal, master-agent, and agent’s accounts.

Let me warn though that if there is realization that certain migrations to avoid paying, we shall invoke appropriate adminsitrative measures.

41. Beginning tomorrow, a team comprising myself, colleague Ministers and other key members of Government will embark on a public engagement and sensitisation campaign across the country.

We intend to communicate clearly on the proposed mechanics of the E-levy, its potential benefits to the people of Ghana within the spirit of burden sharing that must guide us in our development efforts as we move Ghana Beyond Aid.

42. As I have indicated already, we intend to use the money to i. create jobs and grow our private sector to employ more of our youth;

ii. accelerate the Digitalization agenda to bring more convenience to Ghanaians;

iii. enhance the security of our digital platforms;

iv. aggressively expand our road infrastructure agenda;

v. reduce our dependence on debt; and

vi. reduce the crowding out the private sector to improve access to credit.

43. Ladies and Gentlemen, a strong recovery needs a clear plan for the future. Initiatives such as the E-levy showcase our determination to build the stronger future our country deserves.


44. Ladies and Gentlemen, contrary to other assessments, I wish to stress that this economy will continue to get stronger. The concerns of our Citizens rating agencies are lingered on revenue mobilisation, lack of access to international market and our E-Levy impasse.

We shall overcome there!!. Similar to most economies, we are emerging from the devastating impact of the COVID-19 pandemic. In spite of this, we do not face any imminent external imbalance.

We have over 5 months import cover which is well above our internal target of 4 months and better than the average over the previous two decades. 45.

Although the current debt-to-GDP ratio as at the end of November 2021 is 78.4%, it reveals a reduction in the rate of debt accumulation (i.e. declined by 34% in 2020 to 18% as at November 2021). Suffice to say that Bloomberg updated their publication that wrongly reported Ghana’s debt to GDP ratio 81.5% to reflect the correct figure as above.

46. We project to achieve a positive Primary balance target to improve stability and reduction in the debt to GDP ratio in 2022 and through the medium term.

In fact, restoring fiscal discipline and putting the public debt on a sustainable downward trajectory is a priority for Government to achieve fiscal consolidation.

47. Based on these outturns and informed projections, we start this year with renewed confidence. This Government has largely met the targets it set for itself in the past.

Stable growth (average of 5.3% between 2017-2020), Controlled Inflation (average of 9.88% between 2017-2020) and a more stable currency (average depreciation of 7.5% betwee 2017-2020, 4.1 percent in 2021) have been the hallmarks of this administration, compared to an average Real GDP growth of 3.94%, average inflation of 15.9% and average currency depreciation of 17.78% for the previous administration.

48. Ladies and Gentlemen, we are also strengthening expenditure management in 2022 and beyond. To ensure that we match all expenditures to revenue inflows, all expenditure commitments in 2022 will be adjusted to match revenue collection.

Therefore, in accordance with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment, beginning in the first quarter of 2022, in commitments across board for all covered entities benefiting from the 2022 Budget, subject to revenue performance. This means that our fiscal consolidation agenda is not going to be only revenue-led but also expenditure focused.

49. In addition to the E-Levy, we are committed to the implementation of other revenue measures including exemptions bill and property taxes, internally generated funds.

50. I look forward to further engaging with you all in the coming days and sharing Government’s vision for creating a country where:

a. Ingenuity is encouraged;

b. Innovation is supported;

c. Public service is valued;

d. Responsibility is shared;

e. Prosperity is shared; and

f. Accountability for the custodianship of public resources is prioritised.

We have in the spirit of burden sharing and consultations gotten 25% off their fees. This is in good faith so let us keep our 1.75% to build our country.

51. The opportunity to build a resilient, more dynamic and prosperous society lies ahead of us. We must all seize this moment to build forward better and wealthy society.

Genesis 11:5&6 says ‘ 5But the LORD came down to see the city and the tower the people were building.

6 The LORD said, “If as one people speaking the same language they have begun to do this, then nothing they plan to do will be impossible for them.

52. Ladies and Gentlemen, thank you and God Bless.


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