Mobile money transactions register drastic drop

Monday July 19 2021
Money pic

Hisham Hendi, Vodacom Tanzania Plc CEO.

By The Citizen Reporter

Dar es Salaam. Four days after the Electronic and Postal Communication Act (CAP 306) came into effect, the Tanzania Mobile Network Operators Association (Tamnoa) has said the business has dropped drastically, therefore asking government to amend the new charges.
In efforts to raise its revenue collections by Sh1.254 trillion to partly fund the Sh36.68 trillion budget for the 2021/22 financial year, the government last month amended the Electronic and Postal Communication Act (CAP 306) by imposing a levy on all mobile money transactions, depending on the amount sent and withdrawn.
Calling it as ‘Patriotism Levy’, Finance and Planning minister Mwigulu Nchemba said it was important that every Tanzanian took part in it.
“With this levy, we seek to boost the government’s funds so we can take care of our pressing needs. We have schools that do not have running water. Apart from cholera, there is also the global Covid-19 pandemic that requires hand washing. The money will be paid through mobile money transactions,” he said an interview a few days before the new law came into effect.

Tamnoa chairman, Hisham Hendi who is also the CEO of Vodacom Tanzania Plc said millions of customers had stopped using their services, especially those in rural areas, due to rising costs which threatened their businesses.
“Customers complain a lot, especially in rural areas, although we continue to provide the best possible services, recognizing that mobile financial services are an important service to the community. We believe the Government will see this and take appropriate action because this tax affects business and hurts the people, ”said Hendi in a joint statement issued by Tamnoa.
Despite losing business, telecommunications companies providing financial services namely Vodacom (Mpesa), Tigo (Tigopesa), Airtel (Airtel Money), Halotel (Halopesa), Zantel (Eazypesa) and the Tanzania Telecommunications Corporation (TTCL Pesa), said the tax reduces competition in the market as well as reduces the motivation to invest more.
In a bid to recover, Hendi said telecommunications companies will continue to engage  the Government and Parliament to state their concerns which he believes will be worked out for the benefit of the nation.
He said they were taking such steps in the realization that the situation could worsen in the future, as the five days of the first deduction were not going well.
“Revenue has dropped drastically because consumers are not using our services as they were in the beginning. The situation is not good, “he said.
On tax equality, the Executive Director of the Tanzania Private Sector Foundation (TPFS), Francis Nanai said the best tax system is the one that involves many people, with taxes being levied at smaller rates.
"The idea of introducing a transaction tax was a good thing but the rates charged are not friendly. TPSF we hear complaints but we believe nothing is impossible. The government should sit down with stakeholders to reconsider these standards and banks should not be left out of this. Due to technology, the phone is also a bank. There are people who borrow or keep savings on their phones,”said Nanai.
Listening to feedback from service providers, customers and agents of mobile financial services, the director said there was a need to conduct research to determine the most appropriate way to implement this tax.

What  service providers say
In more or less similar vein, mobile money agents already claim that customers were blaming them for the steep charges, with some saying they were being short-changed.
In a recently interview with The Citizen an agent based at Tabata in the city, Mr Toni James, said some customers accuse him of scamming by deducting inordinately huge sums in money withdrawal transactions.
“The business is already dropping. Today (yesterday), people have not being using the mobile money transactions  as they normally do in the recent past,” he lamented.
Ms Rahel Farahani said, “My business is a home-based bakery. I rely on network customers because I don’t have business premises. These deductions are going to seriously hurt my business - and I am considering to shift to another location from home.”
Ms Farahani also claimed that the government decision on the new charges will hurt people including self-employed women and youths.