Mobile money volumes to rise to Shs871b by December - report

Kampala. Telecoms have projected increased activity in the mobile money space, expecting to handle transaction volumes of about Shs871b before the close of the year.

The projections follow the signing into law of the Excise Duty amendments that reduced the mobile money tax from 1 per cent to 0.5 per cent.

According to an industry report released at the start of this month, telecoms indicated that they expected mobile money transactions to bounce back following dramatic drops in the months after July.

Mobile money volumes, particularly in July, according to the report, dropped from Shs866b to Shs475b, following the implementation of the 1 per cent tax on all mobile money transfers.
The law has since been reviewed to 0.5 per cent charged on only mobile money withdrawals.

At the weekend, MTN, which commands the largest chunk of mobile money transactions, said they expect customers to return because of relative affordability.
Ms Elsa Muzzolini, the MTN mobile money general manager, on Saturday told Daily Monitor that while the telecom could not make a proper assessment at the moment, it was important that the law has finally been gazetted.

“We believe it [gazzeting the law] is going to bring back our customers because they will no longer have a big affordability issue,” she said, arguing that the 0.5 levy was nonetheless still high, especially for large transfers.
Large transactions, such as those above Shs1m, will have a high collective charge, she said, which is likely to scare away customers.

“It [0.5 per cent charge] is still going to be high for large amounts. So we shall lose some customers, who we believe we need to give more attention,” Ms Muzzolini said.
MTN has also shown optimism that the tax cut will help its push for a cashless economy, which it has been pushing through the MoMo Pay, a platform that allows customers to pay bills through mobile money.

Bank of Uganda recently said it was working on a National Payments Policy that seeks to establish a cashless economy by 2022.
According to data from the Central Bank, at least more than 75 per cent of payments in Uganda are conducted using cash.
The 0.5 per cent tax on mobile money, government says, is part of the larger plan that seeks to widen the tax base.
However, critics say the tax is likely to reverse efforts that have been reached, especially in financial inclusion.

Ms Sumin Namaganda, the Airtel public relations manager at the weekend, said they expect customers, who had kept away from using mobile money since July, to return.
“We welcome the revised reduction [that is] applicable to only withdrawals. The move is in the right direction towards boosting financial inclusion,” she said.

In the last three months, telecoms according to an industry report, have reported a drop of about 27 per cent in mobile money transactions and volumes, which translates to close or above Shs1 trillion.
The tax revision will also affect Uganda Revenue Authority targets, which in a report recently, cut its collection targets to Shs30b for the quarter ending December compared to the Shs103b, which it collected in the quarter ended September. The new projection indicates a more than 50 per cent drop.

0.5 per cent mobile money tax implemented

Telecoms on Saturday implemented the amended 0.5 per cent mobile money tax measure after government gazzeted the law last week. The tax will only apply to withdrawals. The Act reduces the tax that had been implemented on July 1 and will not apply to other forms of mobile money transactions such as payments, sending and receiving money and deposits and buying of airtime, among others. The reduction, telecoms say, is expected to bring back mobile money customers who had kept away from using the service.

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