Bloomberg reported that Kenya, which pioneered mobile money transactions in Africa, had the slowest transfer growth in the last 16 years due to the government’s decision to increase excise duty on transaction fees.
Kenya’s mobile money ecosystem is highly active, with M-Pesa dominating as the largest service provider, followed by Airtel Money.
According to data from the Central Bank of Kenya, the total value of transactions in the country increased from Kes. 7.91 trillion in the previous year to Kes. 7.95 trillion in the year 2023. This growth was accompanied by a 6% increase in the number of mobile money wallets, reaching a total of 77.3 million by the end of 2023.
Although there has been an increase in mobile money transactions compared to the previous year, the growth in the value of transactions has been slow (0.5%) in 2023. As the Kenya Revenue Authority reported, this slow pace is due to increased excise duty on transaction fees, which rose from 12% to 15% last year. This increase in transaction fees has resulted in the slow growth rate, making it the slowest pace since the service was introduced in March 2007.
Other than tax implications, challenging economic conditions have also impacted disposable incomes, contributing to the slower growth in mobile money transactions.
Feature image source: The Economist