Ghanaian technology start-ups are in trouble after Amazon Web Services announced that from March 1, 2025, it will impose a 21% tax on cloud services for customers in the West African country.

This tax consists of a 15% value added tax  and an additional 6% in levies, which include the National Health Insurance Levy, the Ghana Education Trust Fund Levy, and the COVID-19 Health Recovery Levy.

Ethel Cofie, CEO of EDEL Technology Consulting and a digital transformation advisor, feels that the introduction of this tax will have a significant impact Ghana’s burgeoning tech startup ecosystem and its overall digital transformation efforts.

Cofie, who serves on a number of boards, including one of West Africa’s largest insurance firms, as well as fintech and logistics start-ups in East and West Africa, believes the move will result in increased operational costs because cloud services are essential to start-ups, providing scalable infrastructure without the need for significant upfront investments.

She explains: “An additional 21% tax on these services will elevate operational expenses, potentially straining the limited budgets of early-stage startups, higher costs may deter startups from adopting essential cloud technologies, hindering innovation and scalability.

“This could place Ghanaian start-ups at a disadvantage compared to regional competitors operating in more cloud-friendly financial environments.”

Furthermore, Cofie says the move could potentially slowdown digital adoption as increased expenses associated with cloud services might discourage businesses from transitioning to digital platforms, potentially slowing the country’s digital growth trajectory.

Nonetheless, she notes that despite these challenges, Ghana’s public cloud market is projected to grow by 19.78% between 2025 and 2029, reaching a market volume of US$630.10 million by 2029.

“Ghana hosts over 55 active tech hubs, fostering a vibrant startup scene that heavily relies on affordable cloud services for development and deployment,” she says.

Cofie advises start-ups to avoid the unfavourable effects of the new tax regime on start-ups by considering the following measures: Government subsidies or tax reliefs; promotion of local cloud providers; and tax reduction negotiations.

She says: “While the taxation of digital services aligns with global trends aiming to capture revenue from the digital economy, it’s crucial to balance this with the need to foster innovation and support emerging businesses.

“Strategic interventions can help mitigate potential negative impacts on Ghana’s tech startups and sustain the momentum of its digital growth.”