2 February 2013

Kenya: Safaricom Defies Treasury, Raises M-Pesa Fees By 10 Percent

Safaricom has defied the Finance minister Njeru Githae and increased its money transfer service MPesa transaction charges by 10 per cent effective Friday next week.

The firm attributed the move, that will affect more than 16 million subscribers, to the amendments to the Customs & Excise Duty Act gazetted on 1st of February last year.

The cost of sending between Ksh101 to Ksh 2,500 remains the same at Sh25. It will now cost you Ksh10 to withdraw between Ksh50 and Ksh100. The price of sending between Ksh501 to Ksh3,500 remains the same at Ksh30.

The amendments introduced a 10 per cent excise duty tax on transaction fees for all money transfer services provided by cellular phone providers, banks, money transfer agencies and other financial service providers.

The new tariffs will however not affect transactions worth below Sh101.

"Our MPesa tariff structure is guided by our understanding that we need to sustain the robustness and availability of this money transfer services across the country. It also ensures that we continuously invest in our platform and extensive distribution network," said Safaricom CEO Bob Collymore in a statement.

This will be the second time in a year that Safaricom has increased its tarrifs after the March 2012 structure introduced 19 complex tiers for various levels and types of transactions.

While introducing the new tax measures, Githae said money transfer firms would not have any reason to pass on the cost to consumers.

"These charges will be paid by the service providers and not the customers...that is what the law says," Githae said on 4th of October last year while confirming that Parliament had approved the new tax.

The Treasury was targeting the growing money transfer services sector to raise revenues to fund its rising wage bill.

"As Kenya's largest taxpayer, we appreciate the need to support government as it seeks to reach its financial obligations, but we maintain our position that a tax on mobile money is at that this time premature and is likely to have a negative impact on the country's financial deepening agenda by creating an unnecessary barrier for wananchi who are most in need of basic financial services," said Collymore.

Essars Yu Mobile Madur Tanejar country manager, whose company offers Yu Cash money transfer service, said any additional tax on the operations will mean slower growth in the sector.

"Stability in policy is crucial for investment and therefore a move like this will impact negatively implementation of our development plans," said Tanejar.

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