In the two weeks after the implementation of Uganda’s controversial mobile money tax the value of transactions processed plummeted by UGX672 billion ($182 million), Daily Monitor reported.
At a meeting with the country’s Parliamentary Committee on Finance, Bank of Uganda director Charles Abuka said the year-on-year drop implied people were switching back to cash.
Previously mobile money had been gaining a strong foothold in the country and, in December 2017, the Bank of Uganda said mobile money transactions had grown to UGX54 trillion in the previous 12 months.
Abuka’s comments were backed up by MTN Uganda CEO Wim Vanhelleputte, who told the committee MTN had recorded a sequential revenue fall of 30 per cent from mobile money services in the first month of the tax being implemented.
The executive warned he expected further declines if the levy was not changed or revoked completeley.
Uganda’s mobile money tax was imposed on 1 July despite fierce criticism from a number of groups and associations complaining the blanket charge would impact poorer members of society hardest.
At implementation the levy was a blanket 1 per cent charge on money transfers and depositing or withdrawing funds. However, days after the new charge came into effect the deposit fee element was removed due to it being passed in error.
A proposal to reduce the tax has since been tabled by parliamentary officials.