Author name: Dr Maxwell Ampong

Digitization is one of the niche subject matters in the field of information and communication technology. However, its use and application have reached other fields, including the economy, to accelerate growth and development in recent times. The application of digital technologies is expected to characterize future economies as it offers a better quality of life. Many countries across the globe, especially in Africa, are increasingly embarking on the digitization of their economies. Ghana is one of the African countries recognizing the opportunity that digital development (digital economy) has for creating decent jobs, enhancing productivity, innovation, and accelerating growth. Ghana began its digital governance strategy in 2005  (Demuyakor, 2021). The government of Ghana has undertaken several flagship projects, such as the digital address system, which is essential for digital commerce, and more aggressive automation of government business processes (World Bank Group, 2019). Ghana has in place a widespread fiber-optic infrastructure and international bandwidth from five Submarine Optic Fibre cables, which are helping to provide adequate bandwidth capacity to support the digitalization agenda. The country is currently implementing the ICT4AD policy that is promoting public and private investment in various modes of infrastructure to support Ghana’s Accelerated Development Agenda. Some of the flagship digitization projects include National ID, National Digital Property Addressing System, Mobile Money Interoperability, and Paperless Ports, and e-Government Interoperability Framework (e-GIF) (World Bank Group, 2019; Songwe, 2019; Tapscatt & Agnew, 2000). The Government of Ghana, over the years, is making significant efforts and investments that are expected to position the country as a regional hub for digital services. With the upcoming e-cedi, the nation gets a central bank digital currency that will be regulated by the Bank of Ghana. At the 2021 Ghana Economic Forum (GEF) held last month at the Kempinski Gold Coast Hotel, Accra, I interacted directly and publicly with the distinguished Mr. Kwame A. Oppong, Head of FinTech & Innovation at the Bank of Ghana. During Panel 2 on Day 1 of the Ghana Economic Forum, I expressed that I am 100% for regulation, actually 1000% for it. My fear with over-regulation is that it could potentially create black-market economies that would aim to circumvent the protocols that Bank of Ghana has rightfully set in place to protect the stakeholders of the nation. With the ongoing National Digital Agenda, we are all well aware that the Western World is very much interested in having a stake in all of it. The West and the rest of the World are now very ready and willing to invest in Africa especially when it is tech-based. Flutterwave, OPay, Interswitch, Palmpay and Paystack are a few of the many tech-based entities that have reaped the benefits of a continent leaning more and more towards digitalisation. The youth across Africa are now innovating and also leaning more towards tech as they realise that’s where the future is. When the e-cedi finally arrives, it’ll be a game-changer because suddenly, the penny will drop for many naysayers and then they’ll want to get in on the action. I asked Mr. Kwame A. Oppong how Bank of Ghana is preparing the road to certification for these individuals that’ll be innovating left right and centre. My goal was not to suggest that BoG make it too easy because I recognise and agree that KYC and other due diligence measures on the applicant, the tech and how it integrates into the system must be carefully looked at. Still, I believe something should be done to promote and encourage widespread innovation, albeit still regulated. The Head of FinTech and Innovation for Bank of Ghana, Mr. Kwame A. Oppong answered my question. He said: “Thank you very much. I think one thing you’ll observe over the years is that everything Bank of Ghana has done relating to this space has been by design. It’s been carefully thought-through policy that has gotten to the point where you’re hearing some of these results. For instance, we can make a point about mobile money growth between before COVID and after COVID, even during the COVID. I think one of the interventions we made has to do with some enhancements to subscriber wallet balances, limits, etc. We saw some significant uptake in merchants acquiring digital means of collecting payment, and that trend has not subsided. It actually has continued strongly. All through that period we have not stopped. And so you would, for instance, have noticed that we introduced a new set of merchant account categories, which recognises the fact that if you look at the average merchant anywhere from a market in Tamale, a market in Takoradi, a market in Accra, some of the requirements that were in place in the law for them to be onboarded as merchants, if you looked at it, it was a bit onerous. It may be okay for maybe a Kempinski or an organisation somewhere mid-range, but it was a bit burdensome to ask that of them. And so we introduced a new merchant account category and the corresponding requirements for onboarding them that is consistent with their tier KYC approach within the mobile money space, which by the way, Ghana is one of the first countries to implement it. And you see this across the sub region a bit more. We have subsequently implemented several policies and embarked on several initiatives, including the Sandbox. I heard a conversation about Singapore and some other countries. We’re working with them on a Business Sans Borders, which is a Business Without Borders initiative that connects a financial trust corridor between Ghana and Singapore: Ghana as a hub for our region and Singapore as a hub for their region as well. There are several things that we’re doing. But let me point out this: when it comes to the issue of regulation vis-à-vis investment, let’s first understand that so far how we’ve evolved policy has wound up in consumers voting with their feet. When the Findex Survey by the World Bank was published in 2018, then using data from 2017, it put Ghana’s financial inclusion number at 58%. At that time we only had about 11 million mobile money customers. The population was about 29 million overall and

Despite being one of the largest and reliable sources of revenue to the government of Ghana, tax revenue collection in Ghana is constrained by many factors. The tax to GDP ratio of Ghana remains far below what the government targets to achieve by 2023. The Government of Ghana’s target is to achieve tax to GDP of 20% by 2023. However, the tax to GDP ratio of Ghana as of 2019 was 13% and has since been below 15% (Malik et al., 2021). Rev. Ammishaddai Owusu-Amoah, the Commissioner-General of the Ghana Revenue Authority (GRA), at the recently ended 2021 Ghana Economic Forum, stated that Ghana’s tax to GDP has now moved from 12% to 13%. This is a common phenomenon observed among developing countries, especially those in Sub-Saharan Africa. Tax revenue to GDP in developing countries is below 15% compared to 18 percent of emerging economies and 26% percent of developed economies (Lagarde, 2018). One of the factors responsible for the low tax collection in most developing economies such as Ghana is due to widespread tax evasion. Tax evasion implies the efforts by taxpayers to evade the payment of taxes by illegal means. It is the use of illegal means to pay fewer taxes or no taxes at all (Slemrod & Weber, 2012). According to the Commonwealth Association of Tax Administrators (CATA), when tax laws are highly complex it makes compliance burdensome for taxpayers, thereby making them less likely to comply with tax laws. Literacy also plays a role in how people comply with the tax laws. The uneducated often find it difficult to understand the need for full compliance. Public education on the importance of tax and the consequences of not complying with tax obligations is encouraged in this country as the GRA ramps up its efforts to gather more taxes more easily. The perception of taxpayers about the tax administration with regards to how they are treated by the tax administrators and what the tax collected are used for is also an important factor in determining tax evasion. If the tax system is not transparent, people will not feel encouraged to pay their taxes. The recent efforts of the GRA to digitise their processes and do more press helps in this regard. A lot was learnt and better understood of Ghana’s tax intentions when Rev. Ammishaddai Owusu-Amoah, the Commissioner-General of the Ghana Revenue Authority (GRA), attended the 2021 Ghana Economic Forum and answered questions on a panel I moderated. Also, the issue of limited resources and the capacity of our tax administration can be a major hindrance to tax collection in Ghana. The Government needs to ensure that there isn’t the problem of inadequate numbers of skilled personnel coupled with poor infrastructure and logistics, for that will affect GRA’s efforts. This challenge threatens to affect the ability of the tax collector to properly carry out their roles of enforcement, education, and collection effectively and efficiently. This can adversely affect the perceptions of taxpayers about the risk of evasion. They may perceive the risk of getting caught to be low likewise the consequences of non-compliance. Another factor that fuels tax evasion has to do with the nature of the economy. In a predominantly cash-based economy, people are more likely to evade paying tax, since it will be easy to hide income and transaction activities. Moreover, in Ghana, the economy is largely cash-based, as a result, evasion has a very conducive atmosphere to thrive. Despite the advancement in mobile money and internet banking among others, the majority of the economic transactions that take place in the country are done in cash. Any factor that will adversely affect the compliance of taxpayers will encourage evasion to occur. There are serious consequences that tax evasion imposes on an economy. It results in low revenue mobilization due to loss in tax revenue. This might explain why the tax to GDP ratio is still below the target of the government. The ability to collect enough revenue limits the government from carrying out its mandate to the fullest. It hinders the efficient allocation of resources, and hinders certain sectors of the economy from receiving the necessary attention needed. This undermines government efficiency and hinders the growth of the economy likewise the welfare of the citizenry. In addition, a further implication is that it can impose a different tax burden on taxpayers. Government or tax authorities may decide to compensate for the loss in revenue by raising tax rates. This increases the tax burden on the existing small number of taxpayers in the country. The evasion can become even more severe if the rate is high. It affects work efforts and causes savings to decline or even diversion of investment resources in the economy. Widespread tax evasion imposes an extra cost on tax authorities, thus in trying to curtail the problem, the authorities will need to put in mechanisms to monitor the evader. This will require extra use of already scarce resources, which could be used for other productive ventures in the economy. The government’s recognition of the widespread of this phenomenon and the unsatisfactory performance of tax revenue collection over the years has necessitated governments over the years to embark on several reforms geared toward improving tax revenue collection. However, these reforms have not yielded much significant improvement in tax revenue performance in Ghana (Osei & Quartey, 2005). Moreover, technology trends over the years inevitably change how economies operate. This has a huge impact on many aspects of our everyday life including on tax administrations. Many governments and economies are adapting to these technological advancements to prove the collection, processing, tracking, and dissemination of information have helped enhance public service delivery. The government of Ghana has also recognized these developments and is adapting to the digitalization of the economy. Government is increasingly turning the economy digital as evident from its digital inclusion agenda. The government of Ghana has embraced digitization as a key policy goal and recently introduced a number of programs designed to develop a

If You’re Reading This It’s Too Late. I’ve always wanted to use that line. If you’re actually reading this on Monday 18th October, 2021, it’s then not too late. You can join us through Zoom conferencing using the link and logins below: Link: bit.ly/GEF2021Day1 Meeting ID: 912 806 3388 Passcode: ghana I will be serving as moderator together with the distinguished panel below: Please find below the Line-up for Plenary 2 of Day 1 of the Ghana Economic Forum 2021. Self-introduction by moderator. Introduction of what the Panel was set up for. Topic: Digitalization of the Ghanaian economy: e-currency, electronic payment systems; critical vehicle to promoting economic growth and development. This panel discussion is about the digital leadership of a person or an organisation, and the country’s preparedness to get on the train to national digitisation. It’s also about understanding our current readiness and the panellists views and appetite for paths that could and should be taken. I wanted the session to be real with real impact. So we’ve given the panellists the opportunity to view the questions beforehand. Some of them are from players in the industry who are in attendance, intended to invoke debate. So some of these questions might be challenging but we believe that this is what the Ghana Economic Forum has been set up for. For those of us reading the B&FT today, this is the event line-up listed as will happen. Short introduction of the Panellists, about 30-60sec each, read from their submitted profiles. Two questions will be put forth each of them. We shall listen to comments from two organisations. We shall take a couple questions from the audience, both here and online. Up to 3 minutes shall be given to each panellist for closing remarks. I will give the vote of thanks to panellists and organisers. And then we will conclude the panel. We begin with a question to Mr. Kwame A. Oppong, Head, FinTech & Innovation, Bank of Ghana. Question to Mr. Kwame A. Oppong: To our audience who’ve heard of the coming e-cedi, how different is the e-cedi from the Ghana Cedis I have in my pocket right now and how different is it from the cedi in our bank accounts? Question to Mr. Nana Yaw Owusu Banahene: With the coming of a central bank digital currency (CBDC), it’s worthwhile for us to define what that could mean to the average Joe or most of our audience who are in Business. Nana, what does having a CBDC mean to a business not unlike yours? Question to Mr. Ammishaddai Owusu-Amoah: Whenever I’m stopped in traffic after work by a police barrier, in my younger days I used to just think “hurry up and let me go home”. Now, I see those few seconds to a minute as my contribution to community safety. That’s how I view taxes now; our quota to national development. How will the e-cedi impact our GRA’s mission to aid citizens in contributing their quota, and the fight against tax evasion? Question to Mr. Andy Akoto: The accounting industry has been one that has seen first-hand what it means to migrate from the physical to the digital. What are some of the impact to expect when we drastically reduce the cost of information transfer, which is what I think a CBDC will do? Question to Dyann Heward-Mills: How can we build trust and ensure good governance in a digital currency, and what data protection protocols on a macrolevel will help the digital journey along? Question to Mr. Julian Opuni: I don’t think we can talk about digital currencies without mentioning the very widespread use of Mobile Money. Using that as a case study, what do you think has been the biggest impact of mobile money technology on business transactions, at least so far? Comment from Impact Market: Impact Market is an organisation that raises funding for low-income communities through easily accessible digital currency. I asked, “What are some of the biggest roadblocks that mid-size businesses and entrepreneurs face along the digitisation journey” and their CEO, Marco Barbosa said, and I quote: “I think some of the biggest roadblocks entrepreneurs face include the lack of: policies that incentivize risk taking, openness to learn new processes/technology, and proper infrastructure (both in finance, technology and education). Policy makers in financial, governmental, and the tax space needs to sit and have well-structured dialogues with MSMEs, entrepreneurs and large corporations to create more accessible processes. Much too often, industry leaders who are at the centre of decision and policy making fail to realise that a broken or ignored system goes on to negatively impact the overall economy of a state or country, and this further goes on to fuel dissent and unnecessary hardships for the very innovators who will move a country forward. In the specific case of finance and its infrastructure, how have you been preparing for the web3? I would recommend to do not block/delay innovation and new tech adoption with heavy regulation, specially blockchain. Embrace it, be friendly and welcoming when it comes to new technology exploration. Make efforts to learn first, and listen to the talent and entrepreneurs (the builders of the future). Create conditions where even foreign entrepreneurs would consider to move in. Some examples to drive more incentives, growth, and align interests, could include much lower tax to new companies for the first years, more investment in tech education and infrastructure, create funding mechanisms to drive more capital to the country (like matching foreign investments in local start-ups), facilitate access to credit and investment, provide tax incentives for big corporations when working with start-ups (either investing or being a customer), and more.  But, most important, to drive long lasting entrepreneurship and prosperity, you need first to empower local talent and unlock their human potential by fighting poverty effectively. Lack of access to finance (unbanked) is one of the main driving forces of poverty. Adopting web3 could dramatically increase efficiency and trust in processes and payments, while facilitating access to finance to everyone. My question to Rev. Owusu-Amoah is