The implementation of the electronic transaction levy by Ghana from May 2022 had a negative impact on Mobile Money (MoMo) revenue for MTN Ghana, a leading mobile service provider.
The drop in revenue comes despite the company recording a 42.7% year-on-year growth in profit in 2022 to ¢2.85 billion ($245 million) amid inflationary and financial pressures on the West African nation over the last one year.
According to MTN Ghana, the contribution of Mobile Money (MoMo) revenue to total service revenue decreased from 22.5% to 19.6% YoY, impacted by the levy.
MTN Ghana increased its Mobile Money (MoMo) revenue by 11.6% year-on-year to GHS 1.9 billion ($163 million) by driving growth in MoMo advanced service offerings such as:
- Retail merchant payments
- Micro-loans
- Micro-insurance, and
- International remittances
The operator, however, expanded the MoMo ecosystem by growing:
- Active MoMo merchants by 4.8% year-on-year
- MoMo agents by 17.2% year-on-year
- Active MoMo users by 15.0% year-on-year
The company also launched a MoMo Business app, which helped to support the revenue growth.
In November 2021, Ghana’s government slammed an e-levy of 1.75% on mobile money and other electronic transactions within the country. The 1.5% levy affects all electronic transactions including mobile money, remittances, and other electronic transactions.
According to the country’s minister of finance, Ken Ofori Atta, the levy will widen the tax net and have more contribution by the informal sector.
Overall, the operator reported a total revenue of over GHS 9.9 billion ($851 million),with service revenue increasing by 28.3% to ¢9.9 billion ($851 million) while mobile rose by 12.8% to 28.6 million, MTN’s audited financial reports for 2022 said.
The performance was driven by various factors including strong subscriber management during the national SIM re-registration program, significant investment in its network, and the effective implementation of commercial initiatives across its voice, data, and Mobile Money services.
In addition to the improvements in revenue, MTN Ghana also expanded its subscriber base by 3.3 million customers and invested ¢2.1 billion in capital expenditure. This investment was directed towards modernizing infrastructure, enhancing IT systems, and expanding network capacity and coverage throughout Ghana.
The company modernized 820 existing 4G sites increasing its 4G population coverage by 8.7 percentage points to 99.3%.
The company experienced a boost in its voice revenue during the fourth quarter of the year, thanks to adjustments made in its portfolio during the prior quarter. This increase contributed to a YoY rise of 24.5% in voice revenue to reach GHS 3.3 billion ($283.7 million). Despite this growth, the share of voice revenue to total service revenue decreased from 34.1% to 33.1%.
Ghana has been facing challenging economic conditions including a surge in inflation and increasing government debt, which have raised concerns about a potential sovereign debt crisis. Ghana inflation hit a 22-year high at 54% in January 2023.
In a statement, MTN Ghana said:
“The macroeconomic outlook for Ghana in 2023 remains challenging with debt sustainability challenges, currency volatility and the risk of further depreciation expected to persist. Coupled with the rising cost of fuel and utilities, this is expected to exacerbate general inflationary pressures and adversely affect consumer spending and business operations.”
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