This archive report was first published on 10 October 2019.
Malawi has reversed its decision to tax mobile money transactions, following harsh criticism of the proposed 1% tax.
Instead, the government plans to introduce a 20% withholding tax on interest earned by trust funds created by mobile money companies, with the Minister of Finance stating that the tax will finance social programs.
Minister Joseph Mwanamvekha had previously suggested the 1% tax to motivate citizens towards nation-building, arguing that it would improve government service delivery.
However, mobile money companies opposed the suggestion, citing concerns that the tax would deter financial inclusion and inflate mobile money costs.
Consumer Association of Malawi Executive Director John Kapito described the tax as a 'war against the poor', while Telekom Networks Malawi Plc CEO noted that the tax would increase mobile money costs by up to 25%.
Malawi's mobile money market has grown significantly, with mobile money transactions increasing by 8.2% to 7 million in the second quarter of 2019, and the value of transactions rising by 39% to $1.4 million.
