The project intends to study the impact of the Electronic Transaction Levy (E-Levy) on the supply of retail digital financial services in Ghana, to advance public knowledge about the structural constraints of the levy from the perspective of suppliers of the service, given the existing conundrum between mobile money taxation and financial inclusion. This levy is a 1 percent (initially 1.5) applicable fee on all electronic transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances. The Government of Ghana introduced this levy to increase its tax revenues to widen the tax net to rope in the informal sector. The announcement and subsequent imposition of the levy have attracted different reactions from different stakeholders. While some supported it as a way of increasing public revenues, others criticized it because of its negative effect on the use of digital payments and on the digitization agenda that the country has been championing. A few months after the imposition of the tax, the government announced its inability to meet the proposed revenue target of the levy, possibly suggesting that transactions may have declined. It is important to note that the country had witnessed a significant increase in electronic transactions with the shift from traditional to digital systems. Given the extent to which firms have adopted e-commerce and other digital payments to support their activities, this project seeks to examine the extent to which the new levy has disrupted retail digital financial services in Ghana to advance public knowledge about its structural constraints.

The more specific objectives are as follows:

1. to understand the impact of e-levy on the use of retail financial services by mobile money agents and other small-scale non-bank financial institutions.

2. to explore heterogeneities in these issues across gender, locality, income class, and formality.

3. to explore the extent to which mobile money retailers have reacted to the imposition of the tax with a focus on risk sharing, coverage, and other overall development impacts.