Social exclusion has become a topical issue warranting global concern. In Africa, many people have remained unprotected against the hazards of economic shocks despite implementing various social security policies. The poor performance of most African economies has in some cases triggered massive retrenchments and abrupt company closures due to viability problems. The concept of social security is not a new phenomenon to sub-Saharan Africa. Before the introduction of formal social security systems, local communities had their own unique traditional ways of protecting their members from the hazards and vicissitudes of life. In recent years, social security policy has been re-evaluated as a crucial weapon in the struggle against social injustice and poverty. The livelihoods of many people in sub-Saharan Africa (SSA) have largely been affected by a lack of financial resources. Many people in the region have social security. Contestably, the plight of many people in parts of this region has been exacerbated by rising unemployment. Whereas social welfare encompasses a wide range of wellbeing-promoting activities such as education, health, housing, employment, and access to water, among others, social security tends to focus on those aspects of human life that interface with economic activities. The subjugation of the indigenous societies in the territory of modern Ghana had a tremendous impact on the evolution of social security. Colonialism neither truncated the indigenous forms of social security nor promoted them. Thus, social security in the colonial period was associated with modernization and the capitalist logic of production.
The Ghanaian social security system operates like the security system in other countries. Like social security systems elsewhere, it provides monthly cash benefits to replace, in part, the income that is lost to a worker and his or her family upon retirement, the death of the family breadwinner, or a physical disability. The taxes paid by employers and employees are “earmarked” and deposited in special trust funds administered by SSNIT. Before independence, social security schemes had been introduced in Ghana, although not at the national level. There were a number of schemes that catered to some categories of workers who were in formal employment and receiving wages. For instance, in 1940, the International Labour Organisation’s convention on workers adopted a requirement that payment in cash be made to workers who were injured in the course of executing their jobs. The workmen’s compensation ordinance (No. 52), which is considered the first legislative endorsement in SS, was passed in July 1940. Then in 1946, the Pension Ordinance (No. 42) established a non-contributory pension scheme (CAP 30) designed for senior civil servants and also the Armed Forces. This was later extended to their widows and orphans. CAP 30 started out as a non-contributory scheme with defined benefits. However, a 5% before-tax contribution was instituted for workers in the civil service and teachers while the Armed Forces were still maintained on the non-contributory plan.
Ghana’s Bold Steps Towards Social Security Reform: Leadership & Innovation
The social protection issues raised are not peculiar to Ghana, although they have been compounded by macroeconomic instability. World trends suggest that social instability is noticeable in all developing countries pursuing structural adjustment policies and all societies in transition generally. Indeed, the world trend has shown that there is considerable concern about social protection, especially pension and retirement issues, even in the developed countries. It is generally known that old-age security systems are in trouble around the world due, in large part, to declining birth rates and increased longevity. This means fewer potential contributors and greater numbers of beneficiaries will be dependent over longer periods on the benefits. Thus, unlike in developed countries where the explanation for the emergence and expansion of social policy is framed as an end product of the process of industrialization, policymakers in Ghana have deliberately used social policy, especially old-age income policies, both as a means and an end.
After emerging as the winner in the 2024 election, President John Mahama’s administration has taken various steps enacting reforms targeted at economic recovery and social justice in Ghana. Part of this reform is the removal of the unpopular E-levy (1.5% tax on digital transactions), betting tax, and emission levy, fulfilling his campaign promises to reduce the economic burden on low-income citizens. According to the Deputy Finance Minister Thomas Nyarko Ampem, these tax removals aimed to reduce financial burden and protect vulnerable households from economic hardship. Mahama’s administration has simultaneously implemented structural reforms to strengthen economic recovery foundations and fight corruption. One of the major moves was establishing Operation Recover All Loot (ORAL), an anti-corruption task force aimed at recovering looted state resources, enforcing accountability, and ensuring good governance in the country. The government under the leadership of John Mahama established new reform in the gold mining sector with the creation of a Gold Sector Regulator to combat illegal mining, increase transparency, and boost revenue from gold trade in the country.
The controversial Electronic Transfer Levy (E-Levy) was first introduced in 2022 under the Akufo-Addo administration as a fiscal measure to broaden Ghana’s tax net and generate revenue from the growing digital economy. The 1.5% levy that was applied to electronic financial transactions was not very popular among average Ghanaians. In a report by the BBC, traders and vendors expressed dissatisfaction and concerns that the levy would drive up costs, reduce the convenience associated with digital transactions, and, more importantly, threaten their source of livelihoods. Despite some exemptions and rate reductions, public dissatisfaction remained all time high. Despite some exemptions and rate reductions, public dissatisfaction remained all-time high. A research by the International Centre for Tax and Development found that dissatisfaction stemmed not from the 1.5% tax itself but from a big distrust in the ability of the government to manage tax revenues effectively. While the E-Levy did raise some revenue around 1% of Ghana’s total tax income, it fell drastically short of its initial ambitious targets, achieving only 12% of projected collections. Though it did not perform as expected, it contributed particularly in identifying high-earning individuals previously outside the tax coverage.
A study noted that the tax was highly regressive, affecting the poor and informal sector workers, many of whom recently embraced digital financial services. Despite various assurances from the government then that the revenue would be used to support development projects, people’s opinions remained largely negative. The usage of e-financial services dropped in the period the levy was implemented because users tried to avoid the additional charges. President Mahama’s swift decision to remove the E-Levy in 2025 was therefore met with public approval, seen as a return to economic justice and a sign that the new administration was listening to the people’s concerns. By eliminating a financial barrier to mobile money usage, the Mahama administration encouraged greater financial inclusion. Still, the challenge remains: how to replace the lost revenue without resorting to similarly unpopular measures. Ghana’s gold sector faced severe leakage, with 60 tonnes ($1.2 billion) smuggled out during the 2022 economic crisis, losses that could have stabilized the cedi and funded development, according to Finance Minister Ato Forson. The sector reform has seen the establishment of the Ghana Gold Board (GoldBod) and the removal of the 1.5% tax on unprocessed gold trade. Although ORAL continues to make progress in its anti-corruption mandate, NPP loyalists have continued to raise opposition and suspicion, citing the creation of ORAL as politically motivated, lacking legal standing, and serving as a tool to silence and harass the opposition. Despite these criticisms, Mahama’s early reforms have attracted positive support from Ghanaians.