Hike in levy sees Kenya’s mobile money transactions slow down
TLDR
- Kenya's mobile money transactions experienced a slowdown in 2023, marking the slowest pace since its introduction in 2007.
- The value of mobile money transactions rose marginally to 7.95 trillion shillings ($49 billion) in 2023.
- The slowdown is attributed to the Kenyan government's increase in excise duty on transaction fees, raising it to 15% from 12% previously.
Kenya, known for being a pioneer in mobile money transactions, experienced a slowdown in the growth of mobile money transfers in 2023, marking the slowest pace since the service was introduced in March 2007.
The value of mobile money transactions rose marginally to 7.95 trillion shillings ($49 billion) in 2023, compared to 7.91 trillion shillings in the previous year, according to data from the Central Bank. Despite the modest increase in transaction value, the growth rate of 0.5% in 2023 is notably slower than in previous years.
A major contributing factor to this slowdown is attributed to the Kenyan government's decision to increase excise duty on transaction fees. The excise duty was raised to 15% in 2023, up from 12% previously, as per the Kenya Revenue Authority.
Key Takeaways
The Kenyan government's tax on mobile money transactions is among the highest in Africa. Initially introduced in 2012, taxes on transaction fees started at 10% and were subsequently increased to 12% in 2018. However, following the enactment of a controversial Finance bill, mobile money users in Kenya are now subject to a 15% levy on transaction fees. This significant tax increase has implications for mobile money users and has impacted the overall usage and growth of mobile financial services in the country. Despite the challenges, however, the number of wallets increased by 6% to 77.3 million by the end of 2023. The mobile money landscape in Kenya continues to evolve, with policymakers and industry stakeholders navigating the delicate balance between taxation and fostering financial inclusion through digital financial services.
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