by AKANI CHAUKE
JOHANNESBURG, (CAJ News) – MOBILE money services have transformed the lives of many across Africa, but taxation policies pose a significant challenge to the financial inclusion gains made by these innovations.
This is exacerbating Africa’s prospects of meeting its Sustainable Development Goals (SDGs) target, after the recent impact of the COVID-19 pandemic, Russo-Ukrainian conflict and climate change.
Vodacom Group has released a policy paper on Mobile Money Taxation, in which that accessibility and affordability are two of the major draw cards of mobile money on the continent, giving people access to the most basic financial services.
M-PESA, the first and most successful mobile money payment service on the continent with 52 million subscribers, is currently available in Kenya, Tanzania, Lesotho, the Democratic Republic of Congo (DRC), Ghana and Mozambique with plans to make it available in Ethiopia.
“While many countries have embraced mobile money services, mobile money taxation can have unintended consequences for the people who stand to benefit significantly from these platforms,” said Stephen Chege, Group Chief Officer for Regulatory and External Affairs at Vodacom Group.
He explained that many of the people using mobile money are highly sensitive to transaction costs, therefore even a marginal increase in the fees associated with using these services could make them unaffordable.
“Higher transaction taxes may even compel some users to return to cash-based transactions,” Chege noted.
He described as common knowledge that the pandemic, the war in Ukraine and climate change had all hampered Africa’s progress towards meeting the SDGs.
Mobile money is seen playing a critical role in meeting some of these goals by driving financial inclusion and reducing poverty among the unbanked by empowering them to access credit, loans, savings and other essential financial services.
“Without sound and carefully implemented policies around mobile money taxation, we risk reversing the many financial inclusion gains already made on the continent,” Chege concluded. Onlineloanservices
– CAJ News