Kenya’s GSMA calls on president to cancel mobile money transfer tariffs

Mergers, Acquisitions and Financial Results

Kenya’s GSM Association has called on Kenya’s President Mwai Kibaki to cancel and reject a proposed law that would levy a 10 percent tariff on all mobile money transfer transactions in the county. The move, GSMA argued, would push the costs up for users and stall the widespread success of the mobile money market in the East African country.

GSMA said the new tax would “hit operators’ earnings, raise transaction fees and reduce investments in Kenya’s mobile money transfer market, whose value of transactions has increased fivefold in the past three years.”

Telecom operators in the country have also voiced their concern over the proposed new taxes, saying it would affect all aspects of the mobile money sector in Kenya and raise costs for users.

The tax is aimed to help remove a financing shortfall created by the recent rise in salaries for civil servants and by increased expenditure on implementation of the Constitution, the government has argued.

The Central Bank of Kenya estimates that the value of mobile money transactions stood at KES 375 billion in the first quarter of 2012, up from KES 240 billion in a similar period last year.

The Kenya Revenue Authority (KRA) expects to generate some KES 2 billion from the new tax, with Safaricom expected to pay an average of KES 1.6 billion based on the KES 16.4 billion it generated from M-Pesa in the year to March, the KRA said in a report.