The Malawi government has approved a 1 percent withholding tax on all mobile money transactions, ITWeb reports. Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said in his recent budget speech that the tax would ensure that more people contribute towards federal building and that the government has scope to improve its service delivery. Critics say that the tax threatens financial inclusion as it would cause mobile money operators to raise the cost of transactions.
Sunduzwayo Madise, a lecturer at the University of Malawi’s Chancellor College, said that the tax would disempower the under-banked and unbanked, and added that it seemed as if the government had changed or abandoned its primary agenda. Madise said that the government had positioned the mobile money service as a solution to empower rural people but it has now seemingly decided to plot against the very citizens it should be supporting, by wanting to take from them the little that they have.
The Executive Director of the Consumer Association of Malawi (CAMA), John Kapito, said that the tax is clearly a war against the poor. The Reserve Bank of Malawi has said that in June, the total number of registered mobile money subscribers was 7 million, with a low 37.4 percent of subscribers using the service during this year’s second quarter. Its report shows that there are 45,929 mobile money agents in the country, with 81.1 percent of them in urban and semi-urban areas and 18.9 percent in rural areas.
