MICROCAPITAL BRIEF: Uganda Government Proposes 10% Tax on Mobile Money Transaction Fees

The Ugandan federal government recently announced in its 2013/14 budget a proposed ten-percent tax on all mobile money transactions in the country. The policy reportedly will affect approximately 8.9 million Ugandans using mobile wallets from the five major telecommunications companies operating in Uganda, including Mobile Telecommunications Network (MTN), a South African-based telecommunications firm; Uganda Telecom, a Uganda-based telecommunications services provider; Warid Telecom (Warid), a United Arab Emirates-based cellular phone service provider; Bharti Airtel (Airtel), an Indian telecommunications company; and France-Telecom Orange (Orange), a French telecommunications operator [1]. According to Ugandan Finance Minister Maria Kiwanuka, the proposed law is expected to raise tax revenues of USD 12 million annually [2]. The extra revenues will also supposedly be used to make up for reductions in international aid that have been justified based on suspected government corruption [2].

David Holliday, the managing director of Uganda Telecom, reportedly cautioned that while additional tax revenues are necessary, “the [mobile money] service is still too young in Uganda to be taxed [1].” The budget still needs to be passed by Parliament and endorsed by the President of Uganda in order to become law. There is no predetermined timeline for the budget’s approval process [3]. Even so, MTN and Uganda Telecom already have increased their rates in line with the government’s new levy [4].

As of January 2013, Uganda Telecom has 2 million subscribers and operates solely in Uganda. MTN reported total assets of ZAR 154 billion (USD 22.5 billion) as of December 2010 with approximately 120 million subscribers across 21 countries in Africa and the Middle East as of July 2013. As of August 2012, Airtel has total assets of USD 636 billion and approximately 261 million subscribers across 150 countries. In the year 2011, Orange had annual sales of EUR 45.3 billion (USD 60.1 billion), 172,000 employees and 226 million customers in 35 countries. Warid has branches in Pakistan, Uganda and the Republic of Congo as of July 2013 and approximately 20 million subscribers as of November 2010.

By Michael Averell, Research Associate

About Mobile Telecommunications Network (MTN)

Established in South Africa in 1994, Mobile Telecommunications Network Group (MTN) is a multinational telecommunications provider that provides cellular telephone service. MTN also operates MobileMoney, a banking platform that can be used on cellular devices. MTN reported total assets of ZAR 154 billion (USD 22.5 billion) as of December 2010 with approximately 120 million subscribers in 21 countries in Africa and the Middle East as of July 2013.

About Uganda Telecom

Established in 2000, Uganda Telecom is a Uganda-based telecommunications services provider. Uganda Telecom also operates Msente, a mobile money service. As of January 2013, Uganda Telecom has 2 million subscribers and operates solely in Uganda.

About Warid Telecom

Established in May 2005, Warid Telecom is a United Arab Emirates-based cellular phone service provider. Warid operates “Warid Pesa,” a mobile money service that allows subscribers to transfer money to other people and merchants, request money, obtain statements, obtain account balances, change personal identity numbers and top up prepaid phones for themselves or others. Warid has branches in Pakistan, Uganda and the Republic of Congo as of July 2013 and approximately 20 million subscribers as of November 2010.

About Bharti Airtel

Founded in 1995, Bharti Airtel (Airtel) is an Indian telecommunications company. Airtel operates Airtel Money, where users can transfer money, pay bills and perform other financial transactions directly on the mobile phone. As of August 2012, has total assets of USD 636 billion and approximately 261 million subscribers across 150 countries.

About France-Telecom Orange

France-Telecom Orange (Orange) is a French telecommunications operator with 172,000 employees and 226 million customers in 35 countries. Annual sales in 2011 were EUR 45.3 billion (USD 60.1 billion). Orange offers mobile telephone and broadband internet services as well as its mobile money platform, Orange Money.

Sources and Additional Resources

[1] Daily Monitor: “Mobile money to get pricier,” http://www.monitor.co.ug/News/National/Mobile-money–to-get-pricier/-/688334/1882336/-/sxt1piz/-/index.html

[2] International Business Timers: “Money For Nothing: Uganda Proposes Tax On Mobile Money Transfers, Asking Citizens To Pay Up After Foreign Donors Pull Back,” http://www.ibtimes.com/money-nothing-uganda-proposes-tax-mobile-money-transfers-asking-citizens-pay-after-foreign-donors#

[3] The Express Tribune: “Uganda: Mobile Money Fees Rise,” http://allafrica.com/stories/201307031285.html

[4] Daily Monitor: “Mobile money fees increased before Parliament approval,” http://www.monitor.co.ug/Business/Commodities/Mobile-money-fees-increased-before-Parliament-approval/-/688610/1902436/-/11xqbr0/-/index.html

MicroCapital story, April 15, 2013, “CGAP, Grameen Foundation, Mobile Telecommunications Network (MTN) Uganda to Finance $1m Mobile Finance Project Research and Development Intitiative,” https://www.microcapital.org/microcapital-brief-cgap-grameen-foundation-mobile-telecommunications-network-mtn-uganda-to-finance-1m-mobile-finance-product-research-and-development-initiative/

MicroCapital story, April 1, 2013, “MICROCAPITAL BRIEF: MTN Mobile Money, Mobile Financial Services (MFS) Partner to Launch KwikAdvance Payday Loans in Ghana,” https://www.microcapital.org/microcapital-brief-mtn-mobile-money-mobile-financial-services-mfs-partner-to-launch-kwikadvance-payday-loans-in-ghana/

MicroCapital story, January 25, 2012, “MICROCAPITAL BRIEF: Obopay, Warid Telecom Partner to Launch Warid Pesa Mobile Banking and Payment Service in Uganda,” https://www.microcapital.org/microcapital-brief-obopay-warid-telecom-partner-to-launch-warid-pesa-mobile-banking-and-payment-service-in-uganda/

MicroCapital story, February 18, 2013, “MICROCAPITAL BRIEF: Airtel Mobile Money Service Expands to Post Officers in Madagascar,” https://www.microcapital.org/microcapital-brief-airtel-mobile-money-service-expands-to-post-offices-in-madagascar/

MicroCapital story, March 26, 2012, “MICROCAPITAL BRIEF: CARE, Orange, Equity Bank Partnering to Bring Mobile Banking Services to Saving Groups in Kenya,” https://www.microcapital.org/microcapital-brief-care-orange-equity-bank-partnering-to-bring-mobile-banking-services-to-savings-groups-in-kenya/

MicroCapital Universe Profile: Mobile Telecommunications Network (MTN) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Mobile+Telecommunications+Network+%28MTN%29

MicroCapital Universe Profile: Uganda Telecom https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Uganda+Telecom

MicroCapital Universe Profile: Warid Telecom https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Warid+Telecom

MicroCapital Universe Profile: Bharti Airtel https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bharti+Airtel

MicroCapital Universe Profile: France-Telecom Orange https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=France-Telecom+Orange

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

Similar Posts: