The argument by the Organisation for Economic Cooperation and Development (OECD) that tightening South Africa’s wealth tax regime would rebalance ... generational inequality has a fundamental flaw: it targets a “flighty” base, says an expert from the African Tax Institute.
At the end of March, Ghana’s parliament adopted a 1.75% tax called ‘e-levy’, which targets all types of transactions above 100 cedis (about $13).
Earlier this year, the government of Cameroon introduced a 0.2% tax on money transfers and withdrawals from mobile money solutions. In both Accra and Yaoundé, these new taxes have elicited some anger among the population.
Industry experts point out that unfair tax rulings have had a direct impact on the development of this money transfer system, which has been booming in recent years.
$1tn in transactions in 2021
Given that the volume of person-to-person transactions has increased to more than 1.5 million per hour, mobile payment services continue to emerge as an alternative to cash for people in low and middle-income countries.
In its latest annual State of the Industry report, the Global Telecoms Manufacturers Association (GSMA) reveals that the value of transactions passed the $1tn mark in 2021 (+31% compared to 2020). The number of accounts registered for mobile money services has risen by 18% to 1.35 billion.
This business continues to grow, particularly in sub-Saharan Africa, where $697.7bn (+40% compared to 2020) was processed through mobile payment solutions. The region accounts for nearly 70% of the total amount of transactions recorded during the past year, far ahead of South Asia ($156.3bn).
A central element in African SMEs
Similarly, sub-Saharan Africa – where the rate of banking remains very low – is identified as the world leader in the mobile money ecosystem, in terms of the number of registered accounts. The region has no less than 605 million accounts (+17% compared to 2020), compared to 325 million in East Asia & Pacific and 283 million in South Asia.
East Africa leads with an estimated financial value of $403.4bn (+31% compared to 2020), followed by West Africa’s $239.3bn (+60%) and Central Africa’s $50.1bn (+24%).
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“2021 was the year when mobile money started to really diversify into B2B services. Beyond traditional transactions, the industry has become central to small businesses. Mobile money helps them operate more efficiently and better serve their customers,” says Max Cuvellier, head of mobile for development at GSMA.
As a matter of fact, the value of merchant payments has almost doubled to a monthly average of $5.5bn. According to GSMA, the new focus for mobile money service providers is not only to attract businesses to their platform by offering better incentives but also to improve financial inclusion for women.
Operators in the running
In this fast-growing market, telecom operators are stepping up their announcements to stand out. For example, M-Pesa, Africa’s leading mobile payment service, has managed to attract an additional 18% of new self-registering merchants through its remote sign-up process.
Launched in Kenya, but also present in Tanzania, the DRC, Mozambique, Lesotho, Ghana and Egypt, M-Pesa – Safaricom’s mobile money division – could become a fully-fledged subsidiary that focuses on developing new financial offers.
For its part, MTN – the continent’s largest telecoms operator with some 205 million subscribers – wants to consolidate its mobile money branch in Côte d’Ivoire, where the South African colossus attracts 6 million active subscribers per month.
To do this, Lynda Ahui Mensah, head of MTN MFS Côte d’Ivoire, is banking on the financial inclusion of women. “We support more than 50,000 rural women in agriculture who have access to all our products and services,” she says.
Meanwhile, the tug of war between the start-up Wave and the other heavyweight, Orange Money, continues in West African markets.
In an interview with Jeune Afrique/RFI, Alioune Ndiaye, CEO of Orange Middle East and Africa (Omea), estimated that Wave’s arrival had caused the destruction of “some 20,000 jobs in Senegal”.
Established in Dakar and Abidjan, the US fintech applies more attractive tariffs than those offered by historical operators, reshuffles the mobile money ecosystem’s cards and reopens the debate on competition between telcos and start-ups.
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