Check out the Vodacom Group’s new policy paper about mobile money taxation, financial inclusion in Africa, and how to overcome barriers to mobile money services.

The Vodacom Group recently released a new policy paper on “mobile money” that examines the effects of shifting mobile money taxation on financial inclusion in Africa.

African governments and the business sector have been working more closely together in recent years to further the continent’s objective for financial and digital inclusion. The study by Vodacom Group emphasizes how financial inclusion in particular is a crucial facilitator for achieving many of the Sustainable Development Goals of the UN (SDGs). These objectives comprise lowering poverty, fostering economic expansion, and advancing market access.

As a result, several African countries have recently embraced digital transformation by establishing enabling legislative frameworks to support the development of novel solutions that give their population more power.

One prominent illustration of this is how the mobile money service M-PESA has developed into a significant force for financial inclusion. Notwithstanding the clear benefits that mobile money services provide for boosting financial inclusion, government tax laws pose a number of threats to the viability of these services and, consequently, the expansion of financial inclusion.

The policy paper “Unpacking the Consequences of Mobile Money Taxes in Africa” by the Vodacom Group examines the main effects brought on by modifications to mobile money taxation.

Financial inclusion is supported through mobile money services

Mobile money services in Africa offer a number of benefits, two of which are accessibility and affordability. They are enabling people to access the most fundamental financial services and have already had a huge impact.

With almost 52 million customers, M-PESA is the first and most popular mobile money payment service on the continent. It is currently accessible in Kenya, Tanzania, Lesotho, the DRC, Ghana, and Mozambique, with intentions to expand to Ethiopia.

Yet, African governments often tax these services to make up for pandemic losses. Vodacom Group says this could hurt Africa’s most vulnerable.

“Although many countries have embraced mobile money services, mobile money taxation might have unforeseen effects for the people who stand to benefit considerably from these platforms,” noted Stephen Chege, group chief officer for regulatory and external affairs at Vodacom Group.

“It’s important to keep in mind that many mobile money users are extremely sensitive to transaction costs; as a result, even a slight increase in the prices associated with utilizing these services could render them expensive. Transaction taxes may force customers to utilize cash again.

“While these levies target mobile transactions due to their huge volume, it’s crucial to keep in mind that the average transaction value is actually fairly low. As a result, taxing mobile money transactions is unlikely to considerably broaden the tax base and may instead cause future tax revenues to decline.


Vodacom’s study outlines a number of recommendations due to the risks associated with inappropriate taxation of these services:

  • Developing mobile money taxation techniques in accordance with established, equity-based tax concepts. This is crucial to preventing taxation from widening socioeconomic gaps and preserving the progress made on the continent in terms of financial inclusion.
  • Governments could design their tax laws so that they apply broadly and proportionately rather than being sector-specific.
  • To reach a middle ground that is advantageous for users, governments and regulators can interact more forcefully with mobile money operators and telcos about the unintended consequences of mobile money taxation.

“It is well known that the pandemic, the conflict in Ukraine, and climate change have all impeded Africa’s progress toward achieving the Sustainable Development Goals,” said Chege in his conclusion (SDGs).

By encouraging financial inclusion and lowering poverty among the unbanked by giving them access to credit, loans, savings, and other necessary financial services, mobile money helps achieve some of these aims. We run the risk of undoing the numerous advancements in financial inclusion made on the continent without sensible and carefully applied policies regarding mobile money taxation.

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