Exploring the Development of Mobile Money Markets and Revenue Collection from Digital Financial Services Taxes in Africa

This policy brief examines the rapid expansion of mobile money and digital financial services, and the recent trend of introducing taxes on these services in Africa. The study focuses on understanding how the market developed in Ghana, Kenya, Nigeria, Tanzania, Uganda, and Zimbabwe, and how the new taxes contribute to tax revenue. The trends in MM and DFS portray a market characterised by resilience and the ability to recover. We show how, after introduction of DFS taxes, there was an initial decrease in usage in the countries studied, but markets typically recovered their momentum. Kenya’s market rebounded quickly after a tax on transaction fees – even faster than Ghana, Uganda, and Tanzania, after introducing taxes on transaction value. For the governments concerned, we show that DFS taxes provide a modest, yet important, revenue stream, generally contributing about 1 per cent to 3 per cent of total tax revenue. Zimbabwe is an outlier, at almost 10 per cent. We also observe that forecasting this revenue remains a challenge in the fast-evolving DFS market. We conclude by offering suggestions for key areas of future research on DFS taxation.