Letshego MoMo takes a hit from new tax in Ghana

04 April 2023

Letshego’s mobile micro lending unit took a hit in 2022 financial results due to a tax imposed on mobile money transfers in Ghana introduced in January 2023.

Letshego’s mobile loan book decreased by 26% year-on-year to P421 million, compared to a mobile loan book of P568 million in the previous year.

Ghana’s government implemented the levy to enhance domestic tax mobilisation and expand the tax base, saying it is providing “an opportunity for everyone to contribute towards national development.” E-levy is collected by Ghana Revenue Authority through licensed banks, specialized deposit-taking institutions, payment service providers, and electronic money issuers.

Once the tax came into force, the International Centre for Tax and Development, Institute of Development Studies says, users panicked, systematically withdrawing cash from their mobile-money accounts. According to the institute, the reform has also changed the money-transfer habits of some users who are increasingly reverting to traditional means such as using cash.

Resultantly, companies like Letshego, and mobile operators like MTN and Vodafone who had been growing their mobile money offerings took a hit.

“The mobile loan book decreased impacted by the introduction of a levy on mobile money transfers in Ghana on telco operators,” said Aupa Monyatsi, Letshego’s group chief executive.

Notwithstanding, the dent on mobile loans, Letshego continued to focus on digital adoption, as 73% of all Letshego loan customers used one form
of the group’s digital channels, whilst 22% of loan customers solely used the digital mall for their loan applications in 2022 financial year. Also, the company is migrating 205,000 of its traditional channel customers to the digital mall platform.

“The Group generated over P206 million revenue from the platform as we continue to increase digital penetration for lower cost of acquisition,” said Monyatsi. “Letshego will further continue to focus on monetising our offerings on the digital mall and broaden access with a revamped LetsGo@Work employer and employee proposition, which supports government and non-government sectors.”

In 2022, Letshego launched mass mobile loans in Uganda and Botswana and this year the company aims to launch in Lesotho, Tanzania, Kenya, and Nigeria.