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Uhuru directs mobile operators to increase rates

The cost of sending money through mobile services such as Safaricom’s M-Pesa will increase further after President Uhuru Kenyatta proposed to raise tax on the services.

The President is targeting products consumed by a vast majority of Kenyans in a bid to raise more tax hence proposing an increase in tax from 12 percent to 20 percent on mobile services.

CS Henry Rotich

On July 1, Safaricom raised the M-Pesa charges with those dealing with higher transactions bearing the heaviest burden.

Withdrawal of amount between Sh501 and Sh2,500 from M-Pesa agent went up by Sh1 to cost Sh28 up from Sh27 while withdrawing Sh2,501 and Sh3,500, which was previously Sh49 went up to Sh50.

The same Sh1 increase also applied to withdrawals between Sh3,501 and Sh5,000, which moved to Sh67.

Further, withdrawing between Sh5,001 and Sh7,500 and Sh7, 501 and Sh10,000 would cost Sh2 more up from Sh82 and Sh110 to Sh84 and Sh112 respectively.

Safaricom slapped a Sh3 increase on transactions between Sh10,001 and Sh15,000, which now stand at Sh162. A Sh4 increase applied on withdrawals between Sh15,001 and Sh20,000 up from Sh176 to Sh180.

Safaricom said higher duty on mobile payments would reverse the gains made on cashless payments and mostly hurt the poor, most of whom do not have bank accounts and rely on mobile cash transfer services.

This review comes just weeks after Treasury secretary Henry Rotich increased the tax by two percentage to 12 per cent in July 1, prompting operators to increase M-Pesa charges.

Some Sh3.7 trillion was transacted via mobile phones in the 12 months to March 2018, with M-Pesa controlling more than three quarters of the transactions.

Millions of Kenyans rely heavily on mobile money keeping value of transactions on a steady growth path in the past 10 years.

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