Tanzania's mobile levy 'target' fails as uproar continues

By Osoro Nyawangah, DAR ES SALAAM Tanzania

The government of Tanzania through the ministry of Finance and Planning has started collection of mobile money transaction levy in a 'bad foot' by collecting only 48 percent of the targeted 100 billion shillings per month amid uproar.

In the 2021/22 financial year's budget, the Members of Parliament amended the Electronic and Postal Communication Act (CAP 306), imposing a levy on all mobile money transactions depending on the amount sent or withdrawn, in an an effort to raise revenue collections by 1.254 trillion shillings to boost the 36.68 trillion budget.

The government targeted to collect over 100 billion shillings per month from the newly introduced source that caused uproar from the citizens.

The country's Finance and Planning Minister, Mwigulu Nchemba told members of press Friday August 20 that the government has collected 48 billion shillings in four weeks.

The collection missed the target by almost 52 percent with critics claiming that most citizens have opted to transfer money through bank instead of mobile because of the heavy charges imposed by the government.

Upon introduction, the levies sparked a public uproar as the public said they were regressive and too high to carry, whereupon President Samia Hassan promised that the government will come up with a friendly modality on how to execute the levy. 

The president acknowledged concerns from the public and promised a fair solution but it has been hard to bring about that outcome.

One month since the government indicated it would review rates of the levy charged, a decision is yet to be made, with revenues generated looking too tempting to forgo.

Nchemba was at pains to explain why the government has not fulfilled the promise of reducing the rates that stakeholders said would derail financial inclusivity.

"Tanzanians should keep waiting until all the government works on all the pending issues that are of concern to Tanzanians, but we should keep in mind that this is an issue of national interest.” He said.

He said the government will come up with a framework to address the matter which among other things will take into consideration the public outcry, noting that the levies were meant to implement various development projects.

"It would be embarrassing to see strategic projects failing due to lack of funding." He insisted, adding that already the funds have been channeled to development projects including construction of classrooms and health centres.

The minister also affirmed that the government has collected 26 billion shillings since the introduction of a 'new' fuel levies, and it was working on seeking out other means of expanding the tax base.

Oppositions and activists said that by imposing new levies to the citizens instead of better management of income from the normal taxes, the government has failed to capacitate the economic growth in the rural areas.

Renowned lawyer, Fatma Karume said on her twitter account that those who have audience with the president should advice her that paying 3,000 shillings as levy for transferring 20,000 shillings is a big burden to common citizen. 

"Mwigulu has disenfranchised the poorest people in the country further. It makes me so angry." Said Fatma.

Tanzania’s telecom companies noted an immediate change since the government introduced the levy. 

“Our revenues are dropping drastically because consumers are not using the service.” Said Hisham Hendi, the chairman for Tanzania Mobile Network Operators Association and Vodacom Chief Executive. “The situation is not good at all.”

"Mobile money is an ecosystem. This tax will have unintended consequences along the supply chain for value-add services like microinsurance and payGo (pay as you go) services which are not possible without mobile money wallets.” Said Mrusha Jones, Founder at Innovation Hub255. 

“The mobile money agents will also be affected. They will get lower commissions if there are fewer transactions.” - Africa