IMANI-GIZ Reform Dialogue on Ghana’s Digitalizing Agenda and the Fourth Industrial Revolution
Accra, 22 June 2022 — The IMANI Centre for Policy and Education (“IMANI CPE”) and the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (“GIZ”) on 22 June 2022 held this year’s second IMANI-GIZ Reform Dialogue Series (RDS) on the theme “Ghana’s Digitalizing Agenda and the Fourth Industrial Revolution (4IR)”. The dialogue sought to engage relevant stakeholders to discuss government’s digitalisation policy and its alignment or otherwise to the 4IR as well as the controversial Electronic Transfer Levy Act, 2022 (Act 1075) E-Levy.
Panelists at the event were Dr. Augustine Blay, Executive Secretary of the Vice President, Isaac Amoako, Member of the E-Levy Technical Committee, Ghana Revenue Authority (GRA), Maximus Ametorgoh, Digital Marketing Strategist and CEO of PoP Out, and Selorm Branttie, Global Strategy Director, mPedigree & Vice President – Strategy, IMANI Africa. The programme moderated by Winston Amoah started with a presentation of a research report by IMANI on the “Impact of the 1.5% Tax on Electronic Transactions (“e-Levy”) on Ghanaians and Coping Strategies.”
IMANI Survey on Digital Financial Services
King Carl Tornam Duho, a Finance and Economic Consultant at IMANI presented findings of the survey. The presentation focused on three themes covering the implications of the introduction of the e-levy, the impact of the e-levy on Ghanaians, and the coping strategies of the respondents. The findings show that majority of the respondents (55%) use digital financial services for personal purposes. While convenience drives the usage before and after e-levy, cost concerns have overridden security concerns after e-levy was implemented. This means that people are ready to risk using cash and traditional financial services despite the security risks just to avoid the e-levy.
86% of the respondents have always been against the e-levy while 83% indicated they have reduced their volume of transactions. This was because 73% do not want to pay the e-levy at all while 24% are ready to pay only when it is less than 1.5% that is currently charged. Carl noted that despite the government’s initial forecast of an attrition rate of 24% for the first three to six months, this is likely to be way higher. Also, this undermines the ability of the government to raise the GH₵ 4.5 billion (GH₵560m per month) e-levy revenue target as forecasted for 2022. He recommended that the e-levy handle be reviewed downward in order to reduce the negative impact on financial exclusion and subsequently prevent taxpayers from learning ways to avoid taxes altogether.
Initial Comments on the E-Levy Presentation
The four panelists were asked to share their views on the presentation and the results from the IMANI Survey. All admitted to the usefulness of the research and the quality of the analysis. Specifically, Maximus Ametorgoh noted that it is a clear expression of what customers think and feel and an indication of what has to be changed. He believes there are different tax models that could be used, for instance, a subscription-based model. Selorm Branttie noted that the survey is one of the first empirical studies on the perspectives of the e-levy. He indicated that it correlates with initial thoughts of policy analysts calling for more deliberations to shape the policy to derive the intended objectives. He said the e-levy is stunting digitalisation as stakeholder management prior to implementation was poorly done. Dr. Augustine Blay noted that the sample size of the study is good and the methodology is clear and reflects the views of the people but the government will wait to see what the actual data from the telcos, banks, and designated charging entities will look like.
While admitting to the relevance of the research, Isaac Amoako noted that it is too early to draw conclusions on the e-levy. He said the GRA has a sense of the amounts the designated charging entities are getting but is not clear yet. He clarified that the requirement is for the proceeds to be sent on the last date of the following month, meaning the proceeds for May 2022 have not yet been received as it will be done on June 30, 2022.. He revealed that there are some direct tax benefits of the e-levy policy, as since its implementation the GRA is able to get the data of about 300,000 merchants (for just one charging entity) which will be monitored for direct tax purposes especially as some data matching is done reveal less than 1% of these merchants were paying their direct taxes prior to the introduction of the e-levy.
Critical Issues on the Fourth Industrial Revolution in Ghana
Dr. Augustine Blay said that to comment on the 4IR, it is important to understand the previous industrial revolutions. He noted that the aim of the 4IR is to develop the module component of technology and add the matured technology components to achieve an objective which covers increasing productivity, efficiency, and cost reduction. To him, government policy is to nurture key technologies to drive development in the country. He cited examples of progress the government has made in developing the national identification system, the digital address system, the institution of Ghana.gov and others. He believes the government is focused on enhancing e-government and the synchronisation of various information. He noted that the matured level of digitalisation requires horizontal integration of agencies which is more complex, breaking silos and creating synergies. He also noted there is a need to look at the knowledge supply chains for the ability of Ghanaian businesses to use the technologies. He noted that the aim of the government is to use the databases (at GRA, NIA, DVLA, etc) to merge them using identity keys.
For Selorm Branttie, the private sector has many unanswered questions. The big picture has not been made clear and the focus of the modules is on government revenue acquisition and mobilisation instead of focusing on what digitalisation can give. He explained that for the modular expansion of digitalisation, the big picture has to be focused on expanding development, like urban spatial planning, addressing housing deficits, and land ownership. He said the private sector is being used as a tool to generate the revenue so it should not be used as an after-thought which is not deeply involved in direct stakeholder engagement and policy making. He revealed that there is no document on government as a service and how it will support the ease of doing business. He believed the country has retrogressed with the introduction of the e-levy as people are going back to the old ways of transacting. Dr Augustine Blay responded that the digitalisation agenda is not based on the revenue side alone but there are other areas like the National Health Insurance Scheme (NHIS) renewal and the innovations at Social Security and National Insurance Trust (SNNIT). He believes the vision is to run the country as a technology entity and see citizens as customers. He clarified that the government’s internal and external processes consider the interest of private sector actors.
Maximus Ametorgoh agreed with Selorm Branttie. He also does not see the big picture impact when he said “they [government] do not know where the private sector fits in.” He explained that Snowcode (a private satellite locator service) was developed before the government introduced its Ghana Post GPS system instead of building on Snowcode’s. He also noted that BusyInternet (a private Internet café) catered to users well before the government considered the expansion of data usage albeit at higher prices. He also confirmed that all government is interested in is raising more revenue while businesses are collapsing. He believed there is a need for government to support e-commerce more. He gave credit to Telcos for investing massively in the industry for the past fifteen years, while governments have simply taxed the joy out of their value-adding business. He wondered if the government has been taxing entities like Facebook for running adverts in Ghana-. When asked, Isaac Amoako explained that he does not know how much the government got from Facebook adverts for political parties during the 2020 election. He indicated that government tax payment processes and filing of taxes have been enhanced over the period. Also, the tax potential is now about GH₵50million from the previous GH₵20 million.
On the Future of the Tech Sector in Ghana
Despite concerns raised by panelists, all are optimistic about the future of the tech sector in Ghana. Mr Branttie believes the country is 200% prepared, Dr. Blay believes Ghana is 500% prepared, and Mr. Ametorgoh indicated Ghana is 400% prepared. Selorm Branttie noted that Ghana is among the first on the African continent to embrace digitalisation. He explained that for them at mPedigree they have been exploring and implementing technologies across the continent. He advised GRA to engage the tech companies more than just focusing on the tax-tax approach. He believes that the easing of business opportunities and inclusion benefits are enormous. He highlighted that there are implications for e-education, e-health, land ownership, and securing of capital. He believes there is a need for coherence across private, public and civil society organisations (CSOs). He noted that there is also a need to minimise business risks and quizzed why banks are now just focusing on lending to the government and leaving the private sector out. Maximus Ametorgoh revealed that the banks are also feeling the pinch of the e-levy and predicted that very soon the banks may not be profitable as innovations like e-cedi, retail banking, agent banking, and others are impacting them. He believed that banks should invest in start-ups to remain relevant.
Professor Akilapa Sawyer asked that he is concerned about how a raw material-producing country like Ghana will be talking about the 4IR which is focused on AI, machine learning, internet of things which is more advanced than what the country currently has. Isaac Amoako clarified that the use of AI and others need to be based on existing basic frameworks Digitising land records has been long overdue, but the process has begun. Mr. Amoako also mentioned that the Registrar-General’s Department (RGD) processes and tax filing processes have been digitalised. Dr. Augustine Blay added that technology issues at the global or regional level are more about market share and the legal regimes make things difficult. He noted there are plans to ensure interoperability across Central Banks and also to support the AfCFTA. He added that the skillset of tomorrow depends on STEM disciplines. He noted that the government has secured funds for building 40 STEM academies for training about 3000 students. This will cover computer science and robotics.
The discussion focused on the issues of STEM education. Maximus Ametorgoh noted that the STEM idea is good but it should be across and over all cycles of education. He advised that the government should add a core course to the curriculum. Professor Godfred A. Bokpin believes that STEM is about integration and there is no need to have stand-alone STEM systems. He noted that if it is integrated in the existing curriculum, we would spend less and also make more impact and create more value.. He advised that digitisation should not be deployed as a tool but should be regarded as a whole economy, especially when the entire value chain is considered. Dr Augustine Blay noted that the Ministry of Education is working on integrating STEM into the mainstream education system. He notes that the plan is to ensure a 60:40 Science to Humanities ratio.
Selorm Branttie believes that Ghanaian enterprises should be involved in developing tools and systems to take advantage of economic and investment benefits. Also, to cover borderless skillset to take advantage of the AfCFTA and other developing issues. He thinks we are doubling back on centralisation in the policy space, which is inimical to growth. He asked, “the big question we should ask ourselves is…how do we create that mentality, design everything we do to understand that we are going to be in the near future where we might have spent millions of dollars building capacity, building [different things which] then will be completely obsolete and irrelevant by 2030 or 2040 because we have not even put into our minds how the future is going to look like.”
There were various perspectives shared by participants at the dialogue. Martin Kwame Awagah, the President of the Ghana Fintech & Payments Association hinted that for them in the Fintech sector, the e-levy has affected them in diverse ways and some of them have closed down. He noted the role of the private sector in leading the digitisation agenda and called on the government to be engaging the private sector in policy development. He believes there should be a framework paper on how the digitisation issues will change over the long term in Ghana. Prince Boni, Executive Director at Tabs Consult noted that IT projects are associated with many failures and sometimes there could be a deployment of tools but the real impact of addressing the problems may not be achieved. He believes that in all the efforts at digitilisation in Ghana, the key problem to the limited success is the change management which must be critically considered. Enoch Kwasi Gyetuah, National Executive Director of Ghana National Council of Private Schools noted that there are challenges in advancing digital literacy which is affecting teaching and learning and the use of tech tools in this context. He believes that the curriculum should be assessed with innovative and novel methods. He complained that despite an done in November 2021, the findings are yet to be shared and there are fears that it has been done with an old methodology. Evans Otumfuo, General Secretary of Mobile Money Agents Association of Ghana (MMAAG) complained that as agents they are faced with a lot of challenges and there should be policy reforms to support the work of the agents and help the sector instead of curtailing it. He called for broader stakeholder consultation and the development of policies that support the sector.
About the IMANI-GIZ Reform Dialogue Series (RDS)
The partnership between the two entities aims to carry out nine (9) policy dialogues, six (6) on business climate and three (3) on the investment climate. The first dialogue in November 2020 explored the “challenges and opportunities created by the COVID-19 pandemic for Ghanaian businesses”. The second dialogue took place in March 2021 under the theme of “what the African Continental Free Trade Area (AfCFTA) means for Ghanaian businesses”. The third dialogue in May 2021 focussed on “business taxation and the road to Ghana’s post-COVID economic recovery”. The third dialogue was also accompanied by a briefing paper. The fourth dialogue held in July 2021 focussed on “access to affordable energy to support economic growth and job creation in Ghana”. The fifth dialogue was held in September 2021 on the theme “business registration, regulation, property rights and their impact on Ghana’s business climate”. The sixth dialogue was on corruption and the business climate. The seventh which was the first under the investment climate series explored the macroeconomic environment.
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