Taxing Mobile Money in Senegal: A Threat to Digital Inclusion
Senegal, facing significant economic challenges, is exploring new avenues for revenue generation. The government, elected in April 2024, is implementing its Economic and Social Recovery Plan (PRES) for 2025-2028, which includes a potentially controversial measure: taxing mobile money transactions. While intended to boost state coffers, this policy could inadvertently hinder the nation’s progress in digital inclusion, especially given the crucial role mobile money plays in the Senegalese economy.
Proposed Taxes and Potential Impact
The proposed tax structure includes a 0.5% tax on every money transfer, a 1.5% tax on merchant payments, and a 2% fee levied on merchants. The government aims to generate approximately 220 billion CFA francs (USD 360 million) over three years through these levies, with 130 billion CFA francs expected from individual users and 90 billion CFA francs from merchants. This move raises concerns because of how central mobile money is to the Senegalese economy.
Mobile money isn’t just a convenience; it’s a necessity for the majority of Senegalese. With only 26% of the population having access to traditional banking services, mobile wallets fill a critical gap in financial inclusion. Over 90% of adults aged 15 and above utilize this digital payment system. Taxing mobile money transactions could make these essential services more expensive, particularly for low-income earners, potentially reversing the progress made in expanding financial access and digital literacy. Furthermore, it may lead to decreased usage, undermining the development of a robust digital economy in Senegal. This is a situation which African nations often face when attempting to balance fiscal needs with the requirements of inclusive growth.
Keywords
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