Reports out of Uganda suggest the government has plans to impose a ten percent levy on all money transfers sent via a mobile device. This hefty tariff is the government’s response to closing a fiscal gap resulting from countries pulling aid due to corruption within the ranks of the Ugandan government. The recent news doesn’t sit well when you consider how this will cripple commerce – particularly amongst the lowest earning segment of the population.
The impact of a tax on mobile transfers will be devastating to the economy when you consider the population of Ugandans that will be the hardest hit. In developing countries, mobile transfers are most rapidly adopted by the unbanked and under-banked. A mobile phone provides a gateway to banking and payment services for consumers who would otherwise not be able to easily conduct trade. Those that lack the means or access – either geographically or otherwise – to traditional banking services are best served by making payments using their phone.
Ms, Kiwanuka, What Are You Thinking?
Maria Kiwanuka, the Finance Minister responsible for introducing the tax, should know better. Uganda is one of the poorest countries in the world with nearly a quarter of the country’s 34 million inhabitants living in poverty. An estimated eighty-seven percent of the population live in rural areas that lack any significant banking infrastructure. To make matters worse, the number of bank branches and ATMs is among the lowest in Sub-Saharan Africa when compared to other developing countries. These factors can make even a simple banking or remittance transaction a significant event.
A tariff on mobile money transfers is an egregious act aimed at the exact population of citizens the Ugandan government should be working to aid. Furthermore, a tax on mobile money runs counter to the goal of making the mobile device an accessible and convenient tool for facilitating trade. If this tax is put in place as planned, the only hope is for government officials to quickly realize the error of their ways.