Founding President of IMANI Center for Policy and Education, Franklin Cudjoe has launched a series of counter-arguments against the government’s intention to scrap the controversial Electronic Transaction Levy (E-Levy) emphasizing its potential to provide funds to finance the annual purchase of cocoa.
Franklin Cudjoe makes a strong case that considering the state of Ghana’s economy, the GHC2.4 billion annual revenue accrued from the levy cannot be let go just like that. He is therefore proposing that the government rather turns the E-levy into a national savings for all. This he says becomes a 4th Tier pension where the revenues will be channeled into a pension fund.
“With projected annual contributions (from E-levy revenue) exceeding GHS 2.4 billion (for 2025), Ghana stands to accumulate over GHS 170 billion in pension assets (national savings) in 15 years from the e-levy contributions alone. Assuming voluntary contributions adding two times the pension contributions from the E-Levy, Ghana stands to accumulate over GHS20billion in 3 years and approximately GHS520billion in 15 years,” a Franklin Cudjoe policy brief copied to The High Street Journal read.
Such a huge pension fund, Franklin Cudjoe is convinced could provide an alternative financing scheme for Ghana’s annual cocoa purchases. According to the President of IMANI, it is about time the country weans itself from the external cocoa syndication loan which has been practiced for over 3 decades. The dependence on external loans to fund the annual cocoa purchases has exposed the economy to the vulnerabilities of the global financial market and increased the country’s debt overhang.
Even in recent times, due to the country’s default on its external debt obligations leading to the suspension of payments and the subsequent debt restructuring, the country last year struggled to access a syndicated loan for the purchase of cocoa.
By securing the E-levy revenues into a pension fund which by the NPRA regulations are meant for investment, it could finance cocoa purchases domestically. Mr. Cudjoe is convinced that the cocoa sector as well as the economy, through this suggestion will be secured against external shocks and reduce interest payments on foreign loans.
The President of IMANI further stated: “The mobilised funds could be utilised to finance annual cocoa purchases, reducing reliance on costly external borrowings. They could also provide critical liquidity to avert the looming risk of sovereign debt defaults on maturing restructured domestic bonds in 2027/28.”
Although the 2025 budget which is still under preparation may propose the scrapping of the E-levy, the debate on the controversial levy continues to be heated and highly polarized.
While the business community and ordinary Ghanaians wholeheartedly embrace suggestions to abolish the tax, some analysts and economists are bringing fresh perspectives on why the levy should be maintained.
With different arguments for and against the controversial levy, it’s fate still hangs in the balance. Will the government keep faith with the people and honor its campaign promise to scrap it or credence will be given to the suggestions of the analysts?
