Kenya’s government recently announced a 10-percent excise duty will be charged on fees for cash transactions executed using mobile money transfer systems. The tax measures – in addition to budget cuts – are intended to cover increasing state-employee wages. The policy is expected to have a significant affect on M-Pesa, which serves approximately 14 million clients through 28,000 agent outlets, intermediates two million transactions per day, as of 2011. Prior to the policy announcement, Airtel Kenya, a division of India’s Airtel serving 4 million subscribers in Kenya, removed transfer fees on its mobile money services in an effort to cut into M-Pesa’s market share. Airtel has not announced how long it will waive the fees. Kenya’s treasury reportedly expects mobile money operators to absorb the costs rather than increasing service fees to customers, though some analysts have warned that this is unlikely.
By Jennifer Young, Research Associate
About M-Pesa
M-Pesa is a Kenyan mobile money service. The “M” stands for “mobile,” and “pesa” means “cash” in Swahili. Launched in 2007 by Safaricom Limited, a Kenya-based cellphone service provider, M-Pesa was developed by Vodafone Group Private Limited Corporation, a British multinational mobile network operator. As of 2011, M-Pesa serves approximately 14 million clients through 28,000 agent outlets, intermediates two million transactions per day.
About Airtel Kenya
Airtel Kenya is a subsidiary of the Indian telecommunications company Airtel. It was launched in 2000 as Kencell, rebranded to Zain in 2008 and finally Airtel in 2010. As of 2012, Airtel Kenya serves 4 million subscribers and offers a variety of services including Airtel Money (money transfer service), prepaid and postpaid plans, mobile phone services and internet access.
Sources and Additional Resources
The Next Web Story: “Kenya’s Government Is Set To Start Taxing Mobile Money Transactions”
http://thenextweb.com/africa/2012/10/09/kenyas-government-is-set-to-start-taxing-mobile-money-transactions/
MicroCapital Story: “MICROCAPITAL BRIEF: Kenya Women Finance Trust, Samsung to Market Phones, Mobile Banking to Women in Kenya,” October 16, 2012.
https://www.microcapital.org/microcapital-brief-kenya-women-finance-trust-samsung-to-market-phones-mobile-banking-to-women-in-kenya/
MicroCapital Story: “MICROFINANCE PAPER WRAP-UP: Saving Through the Mobile Phone – The Case of M-PESA, by Olga Morawczynski, Published by Microfinance Information Exchange (MIX),” September 28, 2010.
https://www.microcapital.org/microfinance-paper-wrap-up-saving-through-the-mobile-phone-the-case-of-m-pesa-by-olga-morawczynski-published-by-microfinance-information-exchange-mix/
MicroCapital Story: “MICROCAPITAL BRIEF: Faulu Kenya, Airtel Form Partnership to Offer Mobile Credit,” May 19, 2012.
https://www.microcapital.org/microcapital-brief-faulu-kenya-airtel-form-partnership-to-offer-mobile-credit/
MicroCapital Universe Profile: M-Pesa
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=M-Pesa
MicroCapital Universe Profile: Airtel Kenya
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Airtel+Kenya
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