Safaricom increases Mpesa rates following tax increase


MpesaLet me start by saying that I have exercised a huge level of restraint to avoid hurling a ton of expletives to politicians who thought this was a good idea, taxing more instead of enabling more business and more tax by creating a better business environment around innovation. That said, Kenyan politicians led by Finance Minister Robinson Njeru (glad he got a boot out of politics) decided to pass amendments in the Finance Act of 2012 hence introducing 10% excise duty tax on money transfer fees on mobile money. This basically affects directly, our day to day lives since virtually every day the average unbanked and also banked Kenyan will need to use mobile money. Others get paid using it, we have seen the uptake of bills paying on the same platform and there is virtually an economy running on mobile money that is employer to a huge population of Kenyans directly or indirectly. Add the convenience that it provides where you reduce queues, thus impacting on the amount of time saved cumulatively by Kenyans instead of waiting unconstructively in queues.

How does it affect us?

Well the 10% tax had to in one way or another had to be sent to the consumer, who ultimately pays tax anyway. Safaricom, as the largest mobile money provider in Kenya and globally, reacted by doing the same, pushing this cost to the consumer, effective February 8th. This will essentially increase the cost of doing business for the users who rely solely on M-Pesa for payments for services. Mpesa has over 15 million users  and a daily person to person transaction value of almost 2 billion and transaction value of 140,000.

10% increase is tiny if you are doing a single transaction, now multiply that with the millions that businesses will have pass through Mpesa, when all they asked was convenience to do more business and accept money even remotely, hence increasing business capabilities, and ultimately the much needed tax.