News
Mobile Money Taxation Could Hamper Financial Inclusion Gains in Africa
In an increasingly digital economy, accelerated by the Covid-19 pandemic, there has been greater collaboration between the private sector and governments in Africa to further the continent’s digital and financial inclusion agenda.
Financial inclusion, in particular, is both a pre-condition and a key enabler for meeting many of the UN’s Sustainable Development Goals (SDGs), including reducing poverty, boosting economic growth and promoting market access.
To this end various governments, including Kenya and Tanzania, have not only embraced digital transformation but also provided sound and enabling policy frameworks over the years to allow for innovative solutions that empower citizens.
For instance, mobile money platforms such as M-PESA have been vital drivers of financial inclusion on the continent. However, government tax policies pose a significant challenge to the sustainability of mobile money services and financial inclusion gains made by these innovations.
Vodacom Group’s policy paper on Mobile Money Taxation unpacks some of the impact that changes in mobile money taxation has on financial inclusion on the continent.
In the paper, Vodacom Group outlines that accessibility and affordability are two of the major draw cards of mobile money on the continent, giving people access to the most basic financial services.
M-PESA, the first and most successful mobile money payment service on the continent with 52million subscribers, is currently available in Kenya, Tanzania, Lesotho, the DRC, Ghana, and Mozambique with plans to make it available in Ethiopia.
“While many countries have embraced mobile money services, mobile money taxation can have unintended consequences for the people who stand to benefit significantly from these platforms”, says Stephen Chege, Group Chief Officer for Regulatory & External Affairs at Vodacom Group.
“We need to remember that many of the people who use mobile money are highly sensitive to transaction costs, therefore even a marginal increase in the fees associated with using these services could make them unaffordable. Higher transaction taxes may even compel some users to return to cash-based transactions”, notes Chege.
While taxation plays a critical role in helping governments across the continent meet their revenue targets and make up for the economic losses experienced during the pandemic, the policy paper outlines that this could potentially come at the expense of society’s most vulnerable if not appropriately implemented.
Emphasising the importance of considering how taxation could also affect service providers, the paper also suggests that increased taxes could hamper mobile money providers’ ability to make the investments necessary to provide services to the underserved.
“While these taxes are targeting mobile transactions because of their high volume, it is important to remember that the value per transaction is typically quite low. This means that taxation on mobile money transactions is unlikely to significantly expand the tax base and could instead, result in the reduction of tax revenue in the future”, adds Chege.
Where the tax burden is too high, there is a chance that providers will limit their investments, reducing mobile money penetration, leading to lower customer usage on the continent and consequently, the socio-economic benefits derived from these platforms.
Given these realities, the policy paper on Mobile Money Taxation makes the following recommendations:
– Mobile money taxation strategies can be developed in line with long-standing tax principles based on equity. This is essential to ensure that taxation does not exacerbate social divides and that the financial inclusion gains made on the continent are not lost.
– Tax policies can be structured in such a way that they are proportionate and broad-based in their application, rather than sector-specific.
– Governments and regulators can engage more robustly with mobile money operators and telcos on the unintended consequences of mobile money taxation to find a middle ground that is favourable for customers.
“It is common knowledge that the pandemic, the war in Ukraine, and climate change have all hampered Africa’s progress towards meeting the Sustainable Development Goals (SDGs).
“Mobile money plays a critical role in meeting some of these goals by driving financial inclusion and reducing poverty among the unbanked by empowering them to access credit, loans, savings and other essential financial services.
“Without sound and carefully implemented policies around mobile money taxation, we risk reversing the many financial inclusion gains already made on the continent”, concludes Chege.
News
Firms Seek Specialized Expertise to Combat AI Cyber Threats – Study Reveals
As concerns about the use of AI in cyberattacks increase, companies worldwide are racing to bolster their cybersecurity strategies, according to a Kaspersky survey.
In a new study the cybersecurity company revealed that 92% of IT and Information Security professionals surveyed in the Middle East, Turkiye and Africa (META) region expect the use of AI by malicious actors to escalate over the next two years.
This growing threat is prompting organisations to prioritise cyber defense expertise, with many turning to cybersecurity vendors for specialised support and training.
In its latest study titled “Cyber defense & AI: Are you ready to protect your organisation?” Kaspersky gathered insights from IT and Information Security professionals across SMEs and large enterprises. The findings underscore the urgent need to prepare for AI-driven cyberattacks.
To combat these evolving threats, companies place high value on cybersecurity expertise, with 94% of respondents in the META region highlighting the importance of growing internal expertise through training for in-house employees, and 93% underscoring the need for external expertise provided by cybersecurity vendors. This need spans sectors from retail to critical infrastructure, emphasising a universal demand for advanced threat protection.
To reinforce their cyber protection, organisations are actively integrating both internal and external expertise. Currently, 36% of companies surveyed in the META region are either implementing or planning to deploy external support to adapt to the evolving threat landscape, while 34% are doing the same through internal training initiatives. Additionally, 61% already use external cybersecurity expertise, and 62% have training programs in place, underscoring a dual approach in fortifying their protection.
Cybersecurity vendors’ expertise can come in various forms, from specialised professional services that help organisations deploy their protection solutions, to advanced expert centers that focus on specific security challenges.
One of these centers is the Kaspersky AI Technology Research Center. It brings together the company’s AI research and development efforts, to deepen the protective capabilities of cybersecurity solutions.
Vladislav Tushkanov, Group Manager at the Kaspersky AI Technology Research Center, says: “Our latest survey shows that businesses are acutely aware of the rising threat from AI-driven cyberattacks and are looking to reinforce their protection through comprehensive solutions, including the use of vendors’ extensive cybersecurity expertise.
The Kaspersky AI Technology Research Center plays a pivotal role by helping us leverage AI advancements to enhance our threat protection strategies and explore innovative ways of using AI in cybersecurity. It also enables us to address security concerns specific to AI itself, ensuring that businesses are prepared for the latest AI-driven threats.”
News
EFCC Dismantles Fake Hotel Review Syndicate, Arrests 105 in Crackdown
Economic and Financial Crimes Commission (EFCC) has dismantled a fake hotel review syndicate and arrested four Chinese nationals and 101 Nigerians for their roles in the elaborate internet fraud scheme.
Victims were allegedly first lured into rating hotels in exchange for small sums of money.
Eventually they would be encouraged to make bookings in any of the rated hotels for as much as $500.
They were told that the company would pay them back with chunky interest into a crypto wallet bearing their names.
However, the victims would in the end not be able to open the wallet.
EFCC announced that the suspects operated out of Naka Hall Plaza on Abutu Garba Street in Gudu, Abuja, where agents recovered 100 compact workstations.
Dele Oyewale, spokesman, EFCC, said the suspects used fake foreign identities to target unsuspecting victims, primarily U.K. residents.
Authorities said the criminal network was allegedly led by the Chinese nationals, who recruited and trained Nigerian youths with advanced technical skills to act as customer service representatives.
These representatives followed a predesigned script to deceive their victims online.
The operation follows a separate crackdown weeks earlier, in which 792 suspects — including 148 Chinese nationals — were arrested for involvement in cryptocurrency and romance scams.
The foreign nationals allegedly used corporate apartments disguised as business centers to train their Nigerian accomplices. These accomplices were reportedly taught to initiate romance and investment scams and use their own identities to carry out fraudulent activities.
The EFCC also highlighted a concerning trend of foreign nationals instructing Nigerians in internet-related crimes.
News
AfDB to Partner LAMATA to Expand Existing Rail System
The African Development Bank (AfDB), has disclosed plans to work with the Lagos Metropolitan Area Transport Authority (LAMATA), to boost the state’s transport system with the development of another rail line.
This was contained in a statement signed by, the Head, Corporate Communication, LAMATA, Mr. Kolawole Ojelabi in Lagos.
Ojelabi said that the AfDB Vice President, Private Sector Infrastructure and Industrialisation, Mr. Solomon Quaynor, gave the assurance during a visit to LAMATA.
He added that the bank was interested in partnering LAMATA to expand the capacity of the existing rail system.
“Quaynor was also in the company of the Non-Sovereign Operations and Private Sector Equity Specialist, Mr Mayowa Ayodele ahead of a visit of the technical team to assess the Purple line,” he said.
The Purple Line is a 60-kilometre railroad along the Redemption Camp in Ogun State, traversing Berger, Agege and Alimosho and terminate at Volkswagen to join the Blue Line.
“The visit follows a recent pitch for investment on 60-kilometre Lagos Rail Mass Transit (LRMT) Purple Line at the African Development Bank forum in Morocco, where the Lagos delegation was led by Governor Babajide Sanwo-Olu.
“This is to further discuss collaboration on the project and other lines outlined in the Lagos Strategic Transport Master Plan. The delegation toured the LRMT Blue Line and expressed satisfaction with the progress of the Blue Line rail system,” he said.
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