Ghana’s burgeoning technology start-up scene is facing a challenge after Amazon Web Services (AWS) announced a new tax on its cloud services. Effective March 1, 2025, customers in Ghana will have to pay a 21% tax, which includes a 15% value-added tax (VAT) and an additional 6% in levies.
Ethel Cofie, CEO of EDEL Technology Consulting and a digital transformation advisor.
This is comprised of the National Health Insurance Levy, the Ghana Education Trust Fund Levy, and the COVID-19 Health Recovery Levy. Industry experts, such as Ethel Cofie, CEO of EDEL Technology Consulting and a digital transformation advisor, are expressing concern over the potential impact on the country’s start-up ecosystem and its wider digital transformation efforts.
Cofie, who also serves on the boards of various organizations, including major insurance, fintech, and logistics companies across West and East Africa, highlights the importance of cloud services for start-ups. They provide essential scalable infrastructure without requiring large upfront investments.
“An additional 21% tax on these services will elevate operational expenses, potentially straining the limited budgets of early-stage start-ups,” Cofie explains. “Higher costs may deter start-ups from adopting essential cloud technologies, hindering innovation and scalability. This could put Ghanaian start-ups at a disadvantage compared to regional competitors operating in more cloud-friendly financial environments.”
Furthermore, Cofie suggests the tax could slow down digital adoption overall. Increased costs might discourage businesses from migrating to digital platforms, which could hamper the nation’s digital growth.
Despite these challenges, the public cloud market in Ghana is still projected to experience significant growth. It is forecast to expand by 19.78% between 2025 and 2029, reaching a market volume of US$630.10 million by the end of the decade.
“Ghana hosts over 55 active tech hubs, fostering a vibrant start-up scene that heavily relies on affordable cloud services for development and deployment,” Cofie notes.
To mitigate the negative effects of the new tax, Cofie recommends start-ups consider several measures:
- Government subsidies or tax reliefs.
- Promotion of local cloud providers.
- Tax reduction negotiations.
“While taxing digital services aligns with global trends to capture revenue from the digital economy, it’s vital to balance this with the need to foster innovation and support emerging businesses,” Cofie concludes. “Strategic interventions can help mitigate potential negative impacts on Ghana’s tech startups and sustain the momentum of its digital growth.”
