The GSMA, the global telecommunications industry body, is working to lobby African governments to create mobile money policies that produce long-term revenue streams for state coffers.
It sees present implementation as opportunistic, with the risk of deterring consumers looking for cheap financial services from making use of such platforms.
As voice revenue and data margins fall, squeezed by public pressure and regulations, mobile operators have been investigating other ways to create revenue streams from their large customer bases.
But the growth of mobile money has seen regulators starting to introduce controls or taxes on these platforms. MTN is already dealing with mobile money taxes in Ghana, Benin and Cameroon, while Vodacom is feeling the effects of such moves in Tanzania.
While this is eating into margins for SA’s two largest operators, the GSMA says some taxes and levies imposed on the continent are actually working against the main goal of allowing access to affordable financial services.
Like Vodacom, which recently authored a white paper on the matter, the GSMA argues that taxing mobile money reduces the main advantage of the offering, which has tended to be the low cost of transacting and a way of making payments other than using traditional banking services.
“We’re seeing a lot of fiscal policies that are coming in, essentially to exploit a very easy target — digital transactions,” said Ashley Olson Onyango, head of financial inclusion and agritech at the GSMA. “There’s a lot of clear data. It’s easy to report on these transactions and these movements. The problem is that it doesn’t have a long-term vision,” she said.
“It’s a very short-term policy solution to fill a budgetary gap or to bring in revenue for different priorities, but what it’s doing is worsening the financial exclusion and exacerbating a poor economic situation.
“A lot of these markets have national financial inclusion strategies and objectives towards financial inclusion within their markets and then they create these fiscal policies that are in direct misalignment with the policies.”
In its latest report on the state of mobile money, the industry body singles out the mobile money levy implemented in Ghana, saying it “shows that the country’s fiscal policies are not aligned with its financial inclusion objectives”.
Earlier in the year, MTN reported that its active mobile money users in the West African country rose 15% to 12.7-million, but the business was hurt by implementation of a 1.5% levy on mobile money transfers from May 1 last year.
The country’s finance ministry reduced the levy to 1% from January.
Even then, not all regulation is bad. “Some of the key contributors to the growth of mobile money in the past few years have been regulatory changes in large markets,” the telco organisation said.
In Nigeria, new licences have seen many new mobile money players emerge, and with this a 41% growth in the number of registered agents. “Not only has this created employment for millions of new agents, but mobile money services are now accessible to more people in Africa’s largest economy.”
While increased regulation of mobile money makes sense in countries where mobile money is growing, SA is still a small market in this regard.
Law firm Webber Wentzel says the local market should gear up for increasing regulation in the broader fintech space, inclusive of payment gateways, remittances, digital wallets and others.
Onyango says the mission now is to work with governments on the continent to balance the need for higher tax collections and greater financial inclusion.
“One of the things we’re trying to advocate for and support governments on is to better understand the longer-term vision of how mobile money can support their fiscal and economic policies.”
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