LIVE FROM GSMA MOBILE 360 AFRICA, TANZANIA: The Tanzania government’s recently announced excise duty on Vodacom’s M-Pesa will discourage operators from investing and improving their mobile money services, industry leaders said at the mobile money leadership forum.
The government announced last month that operators will have to pay 10 per cent excise duty on mobile money transactions for both sending and receiving transfers.
Sunil Colaso, managing director of Airtel Tanzania, said the move will impact the mobile industry by a couple of million dollars every month, adding that excise duty is normally considered a negative tax on goods such as cigarettes and alcohol, and imposing it on a mobile service comes as a surprise.
The tax cannot be passed on to consumers, which is an additional concern, as it impacts the bottom line, he said.
He believes the region has been a trailblazer for mobile financial services, and such steps are “retrogressive”.
Tigo Tanzania CEO Diego Gutierrez said operators are still scratching the surface of what is possible with mobile money and they need to have a business case to push the service out and incentivise the industry to invest, which becomes hard with such taxes.
He said the government should let operators decide on such governance issues.
Sitoyo Lopokoiyit from Vodacom Tanzania was in agreement. He said the mobile money industry is an investment intensive one, as the ecosystem and the agent network need to be grown.
On the topic of merchants in small stores accepting mobile payments, Colaso stressed the need for a single point of sale instead of four to five machines, adding that several models have been tried that have not worked, and a larger push is needed from the industry to come up with ways to make the service scaleable.
Gutierrez was of the opinion that the end game is avoiding customers cashing out and to keep money circulating within the mobile ecosystem.