Higher cost of operation for informal sector as implementation of E-levy begins in May

Businesses to transfer additional costs to consumers over E-Levy

E-Levy to be implemented in May

President assents E-Levy

Economist, Courage Martey, has indicated that businesses in the informal sector may face a higher cost of operations when the E-Levy is implemented.

According to him, the 1.5% charge on electronic transfers will translate to an increase in their transactions since most of these businesses depend on digital and electronic transactions.

“If you are a business in the informal sector, and I suppose there are a lot of businesses in the informal sector who rely on mobile money transfer platforms which exposes them to this e-levy."

"And what that will do is it will add additional cost to their operations. Because when they transfer money either for the payment of goods or for the settlement of debts such as loans that they take, that will translate into a deduction as the E-Levy stipulates. That will be a higher cost either on their capital or their profit margin.”

Speaking exclusively to GhanaWeb, Courage Martey also noted that the case may be much worse for businesses whose profit margin is smaller.

He said, “You may start to see a squeeze in profitability. And for those whose profit margin is very small, if care is not taken it might also eat a little into their capital base. In the short term, I foresee an elevated cost of operations for businesses within the informal sector.”

According to the Economist, “once the E-Levy adds another layer of cost, it definitely will be passed on to the final consumers. That is an outside risk to prices and inflation.”