Malawi's under pressure Minister of Finance, Economic Planning and Development Joseph Mwanamvekha has confirmed the government's withdrawal of the 1%withholding tax imposed on mobile money transactions.

"Although this measure is in line with policy developments in (other) neighbouring countries, government has however, proceeded to withdraw this proposed tax," said Mawanamvekha.

Telekom Networks Malawi (TNM), the country's largest mobile phone operator, Consumer Association of Malawi (Cama) and Malawi Confederation of Chambers of Commerce and Industry were among the companies and organisations that lobbied government to withdraw the tax.

TNM chief executive officer Michiel Buitelaar corresponded with Mwanamvekha and said the tax would increase consumers' transaction cost by at least 25%.

"If the 1% transaction cost is implemented, a simple fund transfer transaction would result in a cost increase of 25% for the consumer, with the cost increasing further as the balance stands to be taxed for all subsequent transactions," Buitelaar said.

Cama executive director John Kapito said: "The tax could have thrown most average income earners into poverty, especially those who are unbanked but rely on mobile money wallet. Malawi only has 2 million people who are banked."

As of June 2019, the total number of registered mobile money subscribers was 7 million, with only 37.4% of the total mobile money subscribers using the service during the second quarter of this year, according to the Reserve Bank of Malawi.