Kenyan newspaper Business Daily reports that the cost of sending money through mobile services such as Safaricom’s M-Pesa will increase further after President Uhuru Kenyatta proposed to raise tax on the services from 12 per cent to 20 per cent.
The president is targeting products like mobile money that are consumed by a vast majority of Kenyans in an attempt spread the burden of taxation.
Without delving too much into the murk of Kenyan politics, let us just say that the president has been facing a huge revenue deficit as he seeks to drive what he calls the “Big Four Agenda”. The four pillars are manufacturing, universal healthcare, affordable housing and food security. One can posit that financial inclusion, driven via mobile money services, already directly and indirectly supports these pillars. It is thus unclear how this move of milking mobile money will help the president’s agenda.
This need for easy answers simply needs to stop. The problem for Kenya is not inadequate sources of tax – it is the fact that much of the tax collected goes to the dons of corruption. That is why Kenyan parlance is awash with terms such as money “getting lost” (as if it has legs). Rather than face up to this monster, it would seem that the president is now resorting to mutilating the very thing that was a positive story.
For the last two decades, Kenya has provided very positive examples on growing mobile money usage, financial inclusion and achieving related benefits. This move is hardly what Kenya needed to consolidate the gains. Sadly, we shall see more of African governments copying this type of thing.
This is a very tragic case of one step forward, two steps backward.