Mobile money becoming too expensive, report says

Taxes, according to the Twaweza survey, have made mobile money too expensive.  

In Summary

• Mobile money has in the last two decades been touted as one of Uganda’s best innovations in the financial markets that has potentially reached Uganda’s unbanked population.
• The growth in the mobile money space, the survey indicates, has had serious benefits with at least three out of 10 Ugandans now able to access credit services.

By Dorothy Nakaweesi

Kampala. At least 79 per cent of Ugandans believe mobile money services have in the last one year become too expensive and unaffordable, according to a survey conducted by
Twaweza.
The survey, which assesses the banking, mobile money and the tax implications on the services, found that the new tax regimes, especially mobile money have pushed the service beyond the reach of the common people.
“Eight out of 10 mobile money users [79 per cent] say the service is too expensive relative to the quality of service provided,” the report indicates.

This, the report says, is an increment from three out of 10 (32 per cent) who felt this way in 2017.
Government last year introduced a 0.5 per cent tax and increased Excise Duty on mobile money from 10 to 15 per cent.
The new taxes, have since seen a spike in mobile money related charges and telecoms have reported a drop in transactions.
The survey, which sampled 1,344 mobile phone users, also indicated that 57 per cent of mobile money subscribers have since reduced the amount of money they transact on the platform.
This was a growth from last year’s 32 per cent, who in the period had said they had reduced transacting through mobile money.

While presenting the finding, Ms Marie Nanyanzi from Twaweza, said: “The consequences of the tax on these services are now beginning to spread. People are now much more likely to find mobile money services too expensive. They have reduced their transactions as a result of the tax and overall, many disagree with the tax.”
Ms Nnanyanzi also indicated that although government had introduced the taxes to widen the tax base, it was important that there is a careful approach to weigh up the amount of tax collected against the long term impact such as slowing inclusion.

Mobile money has in the last two decades been touted as one of Uganda’s best innovations in the financial markets that has potentially reached Uganda’s unbanked population.
The findings also indicate that growth in the banking sector has stagnated since 2009 with only 17 per cent of Ugandans owning a bank account compared to 73 per cent of who hold a mobile money account.

Mobile Money borrowing
The growth in the mobile money space, the survey indicates, has had serious benefits with at least three out of 10 Ugandans now able to access credit services.
Mr Andrew Rugamba, the Airtel head of mobile money, said they have seen growth in micro loans of less than Shs40,000 but the rates were far behind those borrowed through banks.

dnakaweesi@ug.nationmedia.com