Kenya-based mobile operator Safaricom recently increased the cost of transferring funds via M-Pesa, a Kenyan mobile money service, in response to a new government tax on money transfers. Safaricom customers transferring KES 101 (USD 1.21) or more will be charged fees that are 10 percent higher than before. The fees for smaller transactions are unchanged.
The company reportedly opposes the tax, which is 10 percent of the excise duty tax on transaction fees for all money transfer services. “We appreciate the need to support government as it seeks to reach its financial obligations. However, we maintain our position that a tax on mobile money is at this time premature and is likely to have a negative impact on the country’s financial deepening agenda by creating an unnecessary barrier for wananchi [citizens] who are most in need of basic financial services,” Robert Collymore, CEO of Safaricom, reportedly said. Plans for the tax were covered by MicroCapital in October 2012.
As of March 2012, Safaricom reported total revenue of KES 107 billion (USD 1.3 billion) and net income of KES 12.6 billion (USD 150 million). M-Pesa handled an estimated 2 million daily transactions as of October 2012.
By Nicole Boyd, 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 September 2012, M-Pesa serves approximately 19.2 million clients through 45,540 agent outlets. M-Pesa handled an estimated 2 million daily transactions as of October 2012.
Sources and Additional Resources:
Safaricom. “New Government Tax To Hit 16 Million M-Pesa Users,” http://www.safaricom.co.ke/about-us/media-centre/press-releases?layout=edit&id=611
The East African. “Safaricom raises M-Pesa tariffs as Kenya slaps telcos with new tax,” http://www.theeastafrican.co.ke/news/Safaricom-raises-MPesa-tariffs/-/2558/1681810/-/hcocvgz/-/index.html
MicroCapital. November 2, 2012, “MICROCAPITAL BRIEF: Vodafone’s M-Pesa Mobile Money Service to Expand International Options with HomeSend Partnership,” https://www.microcapital.org/microcapital-brief-vodafones-m-pesa-mobile-money-service-to-expand-international-options-with-homesend-partnership/
MicroCapital. October 25,2012, “MICROCAPITAL BRIEF: Kenya to Levy 10% Tax on Mobile Money Transactions,” https://www.microcapital.org/microcapital-brief-kenya-to-levy-10-tax-on-mobile-money-transactions/
MicroCapital Universe Profile: M-Pesa http://microcapital.org/microfinanceuniverse/tiki-index.php?page=M-Pesa
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