Tanzania reduces mobile money transaction levy

Tanzania reduces mobile money transaction levy

After six weeks during which its government has faced increased criticism, Tanzania has finally reduced the amount of its controversial mobile money transaction levy – by 30 percent.

The move was originally justified by a need to raise revenue for the Sh36.68 trillion (just over $15.8 billion) budget for the 2021/22 financial year. It was calculated that a levy on mobile money transactions would haul in some Sh1.254 trillion (about $541 million).

As the Citizen newspaper explains, the government amended the Electronic and Postal Communication Act  in June by imposing a levy of between Sh10 ($0.0043) and Sh10,000 ($4.31) on mobile money transactions, depending on the amount sent and withdrawn. The levy became effective on 15 July. 

As a guide, the newspaper calculates that, bringing all charges into play, sending mobile money to the value of Sh1 million ($431) to someone and having the money withdrawn would cost a total of Sh31,000 ($13.37) – a little under three percent of the total.

This was seen as far too high for many Tanzanians. It didn’t help much that it also seemed to undermine the aims of the second 2018-2022 National Financial Inclusion Framework (NFIF), whose vision is that “financial products and services meet the needs of individuals and businesses consistent with supporting livelihood, household resilience and creation of jobs".

A review was mandated in July. The Ministry of Finance and Planning then issued a statement on 31 August that amendments had been made to the Regulations for Electronic Transactions Levy for 2021 with a view to reducing the rates by 30 percent.

In addition, the statement said, the government has also held talks with mobile service providers, who have agreed to reduce the rates they charge on mobile financial transactions by 10 percent.


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