GSMA urges dialogue amid increase in mobile money taxes in Africa
As more African countries introduce taxes on mobile money and digital services, the GSMA representative grouping of global mobile operators is encouraging dialogue between operators and governments to promote digital inclusion and economic growth.
Mobile money and digital finance platforms have helped drum up financial inclusion across Africa. However, taxes on mobile money and electronic transactions are having a negative impact in countries such as Tanzania and Uganda.
Zimbabwe is the other African country with a mobile money tax in operation.
With Ghana the latest to pass a tax on mobile money and Cameroon also introducing similar levy early this year, the GSMA believes policymakers and operators should engage in wide consultations through dialogue.
This would help to come up with strategies that work towards growth of digital inclusion, economic growth and promote usage of mobile platforms for financial transactions.
“The GSMA fundamentally encourages sector-wide dialogue with governments and policymakers to help foster mobile adoption, usage, and digital inclusion, which in turn will help drive economic growth across African countries,” said Angela Wamola, Head of Sub Sahara Africa for GSMA.
With reference to Cameroon, the IMF recently said “taxing mobile money can be fiscally inequitable and hinder the current low level of financial inclusion”.
The IMF added: “In Uganda, the initial higher-than-expected revenue from the mobile money tax was offset by an overall fall in tax receipts from the telecom sector, caused in large part by the decreased activity in mobile money.”
The GSMA, citing affordability of service and smartphones as one of the key barriers to digital inclusion in Africa, also “recently made the case to rethink mobile taxation in Tanzania”.
Mobile technologies and services are slowly becoming an imported sector for Africa’s economies. But as they have blossomed, African governments’ appetite to tax the industry has also grown.
According to GSMA, the mobile industry generated 9% of GDP in Sub-Saharan Africa in 2019 – a contribution that amounted to more than US$155-billion of economic value.
It reckons that there is broader need for policy makers to dialogue with operators to see how the mobile industry, beyond mobile money, can be promoted to foster growth.
“It is impossible not to look at the impact of taxes in isolation to the wider economic picture surrounding connectivity,” added Wamola.
The International Telecommunication Union (ITU) estimates that a 10% increase in mobile broadband penetration would yield a 2.5% increase in GDP per capita for Africa.