UGANDA:MTN mobile money drops by 50 per cent
MTN daily mobile money volumes have reduced to about Shs50b from an average of Shs100b, the telecom has said.
The drop comes on the back of the highly divisive implementation of the 1 per cent mobile money tax on July 1.
Speaking on the sidelines of the launch of MTN MoMoPay, a mobile solution payment system in Kampala at the weekend, Ms Elsa Muzzolini, the MTN mobile money general manager, told Daily Monitor the 1 per cent tax on mobile money “has already impacted our business” and is likely to have further impact.
“Before the tax was introduced, we used to transfer [about] Shs100b daily. But it has now reduced to about Shs60b or Shs50b,” he said, adding: “This is really bad news to us and the economy at large.”
The tax, she said, has slowed down the flow of money through mobile money, especially in regard to large transactions.
The 1 per cent mobile money tax is currently under review in Parliament.
Civil society and a number of stakeholders have advised government to suspend this tax even as government has indicated the tax is here to stay.
Recently, President Museveni said the 1 per cent had been a miscommunication, indicating that Cabinet had only agreed on a 0.5 per cent on only withdrawals.
Uganda Revenue Authority had initially directed telecoms to charge a 1 per cent tax on all mobile money transactions.
However, this has since been reversed and the tax, which is still at 1 per cent, until Parliament provides a review, currently applies to only withdrawals.
Ms Muzzolini said that whereas they have been the most affected, revenue to government has slowed down from 50 per cent to 30 per cent because of reduced earnings since most people have abandoned mobile money, with some opting for banks and physical movement of cash.
Beyond the transaction, she said, the telecom’s more than 100,000 have greatly been affected with some contemplating to close down their business or cut back on expenditure.
The 1 per cent tax, according to government was intended to widen the tax base and mobilise money to fund infrastructure projects.
However, government has been cautioned by a number of stakeholders, key among them, the Central Bank, not to suffocate one of the channels that has facilitated financial inclusion in the last five years.
The platform has since the advent of mobile money, transacted more than Shs30 trillion.
MTN is leveraging on the numbers to create a window around which Uganda can build a cashless economy because, as Ms Muzzolini said, it is increasingly becoming risky to carry money around.
The window, which shall be built on the MoMoPay platform, will be key in effecting payment for merchandise and making and salary payments, among others.
MTN has, for about a year now, been recruiting merchants such as supermarkets, garages, shops and restaurants, among others.