E‐Levy Implementation and the Performance of SMEs in Ghana: Role of Digital Literacy

• Published in: The Electronic journal of information systems in developing countries Vol. 91; no. 5
• Main Authors: Adela, Vincent, Agyei, Samuel Kwaku, Dadzie, Emmanuel Annan
• Format: Journal Article
• Language: English
• Published: Hong Kong City University of Hong Kong, Department of Information Systems 01.09.2025
• Subjects: Digital literacy; e‐levy; Ghana; Innovations; mediation; Owners; Policy making; Side effects; Small & medium sized enterprises-SME; SME performance; Subsidies; Taxation; Ghana
• ISSN: 1681-4835; 1681-4835
• DOI: 10.1002/isd2.70037

ABSTRACT This study examines the impact of the electronic levy (e‐levy) on the performance of small and medium enterprises (SMEs) in Ghana, emphasizing the mediating role of digital literacy. Given the significant contribution of SMEs to the economy, understanding how taxation policies such as the e‐levy affect their performance is crucial. The research employs an explanatory design with a quantitative approach, utilizing structural equation modeling (SEM) to test the proposed hypotheses. Data were collected from 404 SME owners and managers across Ghana using a structured questionnaire. The findings indicate that the e‐levy exerts a negative and significant effect on SME performance. Digital literacy significantly mediates this relationship, effectively offsetting the negative impact of the e‐levy on SME performance. To the best of our knowledge, this is the first study to explore the mediating role of digital literacy in this context, providing valuable insights for policymakers and SME stakeholders. These results highlight the importance of digital literacy in mitigating the adverse effects of taxation on SMEs. Policymakers should complement tax policies such as the e‐levy with initiatives that enhance the digital competencies of SMEs. Targeted training programs, subsidies for digital tools, and broader educational campaigns can help SME owners and managers strengthen their digital skills. Investing in digital literacy as a strategic priority can also enable SMEs to transform tax‐related challenges into opportunities for growth and innovation.