The government has defended itself in regards to the exorbitant fees people must pay to use mobile money.
“The tax on mobile money transaction is 0.5% on withdrawals. It means that if you are withdrawing 100,000 the tax charge is shs500 and shs10,000 it is shs50. On every mobile money transaction, there is a cost of 10% meaning if withdrawing shs10,000 there is shs1000 on withdraw and only shs50 is tax and shs950 is the charge which goes to the service provider,” Henry Musasizi the state minister for Finance said on Wednesday.
He was addressing at a stakeholders’ meeting that Airtel Mobile Commerce Uganda Limited (AMCUL) had organized at the Kampala Serena Hotel.
Many members of the public have expressed dissatisfaction and asked the government to consider reducing money transfer fees, which they claim raise the price of receiving money.
Several others blame the 0.5% withdrawal tax that the government instituted for these exorbitant mobile money fees.
The State Minister of Finance stated on Wednesday that the service providers receive the majority of the fees.
“We are asking them(service providers) that in order to promote financial inclusion and facilitate our people in the countryside to access financial services, is there a way this financial cost can be brought further down? I don’t want an impression that the mobile money charges are high solely because of the tax. It is not true. The tax charge only applies to withdraw. If I transfer money from your phone to the other, there is no charge. If you transfer electronically throughout the value chain, there is no tax anywhere,”Musasizi said.
However, the minister tasked participants in the fintech sector with developing new ideas and strategies to assist the government and service providers in lowering the cost of mobile money transactions.
“We are asking that in order to promote financial inclusion and facilitate our people in the countryside access to financial services is there a way this transaction cost can be brought further down. That’s where the debate should center.”
Presently, Uganda has around 40.7 million digital wallets that are distributed among 23 licensed mobile network carriers and non-mobile network operators, with person-to-person transactions totaling on average Shs5.99 trillion.
By June 2022, the number of transactions had increased from Shs3.9 billion to Shs4.8 billion, according to BoU.
