The cost of sending money through mobile services such as Safaricom’s #ticker:SCOM M-Pesa will increase further after President Uhuru Kenyatta proposed to raise tax on the services from 12 per cent to 20 per cent.
Mr Kenyatta is targeting products like mobile money that are consumed by a vast majority of Kenyans in an attempt spread the burden of taxation.
“Excise duty on fees charged for money transfer services by banks, money transfer agencies and other financial service providers shall be 20 per cent of their excisable value,” he said.
The review comes just weeks after Treasury secretary Henry Rotich increased the tax by two percentage points to 12 per cent in July 1, prompting operators to increase M-Pesa charges.
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.
The government has been encouraging cashless payments to improve security and reduce fraud. M-Pesa revenues grew 14.2 per cent to Sh62.9 billion for the financial year ended March 2018.
Mr Rotich had earlier said funds from the tax increase will be used to fund universal healthcare plan that aims to cover all households by 2022.
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.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.