Joseph Mwanamvekha, Malawi’s Minister of Finance, Economic Planning and Development has caused a public outcry by approving a 1% withholding tax on all mobile money transactions in Malawi.
In his recent national budget speech, presented to parliament, Mwanamvekha said that the tax would ensure that more people contribute towards federal building and that the government has a scope to improve its service delivery.
However, critics have voiced their concerns saying that the tax would threaten financial inclusion because 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 underbanked and unbanked, and added that it seemed as if the government had changed or abandoned its primary agenda.
Madise said that on the one hand, mobile money service was positioned by the government as a solution to empower rural people but on the other side, the system had now seemingly decided to plot against the very citizens it should be empowering by wanting to take from them the little that they have in a plot to fill up the tax purse.
The Executive Director of the Consumer Association of Malawi (CAMA), John Kapito, said that the tax is clearly a war against the poor.
The most recent results from the Reserve Bank of Malawi show that as of June 2019, Malawi’s total number of registered mobile money subscribers was 7 million, with a low 37.4% of subscribers using the service during this year’s second quarter.
The report also shows that there are 45 929 mobile money agents in the country. 81.1% of those agents are located in the urban and semi-urban areas, while 18.9% of them are in rural areas.
Source Broadcast Media