By Samuel Ouma
Across Africa, governments are increasingly turning to mobile money as a revenue lever as fiscal pressures intensify and digital transactions become more visible, yet evidence from multiple markets shows a consistent outcome: usage declines, financial inclusion weakens, and the tax base ultimately shrinks.
Mobile money has expanded financial access at a scale few systems have achieved, bringing millions into the formal economy and reshaping how individuals and small businesses transact. That progress depends on consistent, everyday usage, which is highly sensitive to cost, and industry analysis shows that when the cost of transacting rises, behaviour adjusts quickly.
The Same Pattern, Repeated
The experience across markets follows a familiar sequence in which a tax is introduced, transaction costs increase, users adjust how they transact, and volumes decline. The expected revenue gains do not materialise at scale, which then leads to revisions or the eventual withdrawal of the policy.
Ghana’s Electronic Transfer Levy illustrates this trajectory clearly, as its introduction in 2022 at 1.5 percent led to declining transaction volumes and lower than expected revenue, before being reduced and eventually scrapped. What appeared to be a stable revenue source proved highly responsive to even modest increases in cost, reinforcing how quickly usage shifts when pricing changes.
The same tension is now emerging in markets such as Senegal, where proposed or newly introduced levies on mobile money transactions have raised concerns about declining usage, particularly in economies where mobile money functions as a primary financial tool. Discussions around alternative approaches, including taxing operator turnover rather than user transactions, reflect a growing recognition that the structure of a tax determines its outcome.
Usage Is Where Inclusion Is Won or Lost
Mobile money is built on frequent, low value transactions tied to daily life, from transport and groceries to informal trade and family support, which means that even small increases in cost accumulate across these interactions over time. These changes shape behaviour in ways that are gradual but significant, as users begin to consolidate payments, delay transactions, or return to cash where it feels more predictable.
These shifts do not happen all at once, yet they steadily reduce the consistency of usage that financial systems rely on, which is why financial inclusion cannot be measured through access alone. What matters is whether people continue to use these services regularly, and that decision is shaped by affordability, trust, and ease of use.
As costs rise, inclusion does not simply slow, but begins to reverse beneath the surface, even as headline access figures remain unchanged.
The Cost Falls on Those Who Use It Most
The impact of transaction taxes is uneven, with low-income users and micro businesses who rely on frequent, low value transactions carrying the greatest burden. These are the users who have driven adoption and expanded the reach of mobile money, which makes the effect of rising costs particularly significant at this level.
Women, who already have lower levels of mobile money usage in many markets, are also disproportionately affected as affordability becomes a constraint, reinforcing existing gaps rather than narrowing them.
A Revenue Strategy That Undermines Itself
Transaction taxes are introduced to strengthen public revenue, yet they risk weakening the system that generates that revenue, as declining usage reduces the volume of taxable activity over time. This limits the effectiveness of the policy while also creating broader economic implications.
Mobile money has supported growth by making transactions more visible and traceable, which means that slowing its use reduces that visibility and constrains the expansion of the formal economy, ultimately narrowing the future tax base governments are trying to build.
This creates a clear tradeoff between short term revenue gains and longer term constraints on growth and participation.
Policy Design Will Determine the Outcome
The issue is not whether mobile money should contribute to public revenue, but how that contribution is structured, as flat levies applied at the point of use place pressure on frequent transactions that sustain the system.
Alternative approaches, including taxing operator turnover, introducing tiered structures, or exempting low value transactions, allow governments to generate revenue without discouraging usage, while some countries are also focusing on using mobile money to improve tax collection itself. These approaches recognise that stronger usage supports a broader and more sustainable revenue base over time.
The Risk Is Gradual, But It Is Real
Africa has built one of the most advanced mobile money ecosystems globally, driven by accessibility, affordability, and trust, and policies that increase cost do not break this system overnight. The impact is gradual, yet significant, as usage adjusts and the system becomes less inclusive, less active, and less valuable as a source of future revenue.
Rebuilding that momentum is significantly harder than disrupting it, which makes the current policy trajectory less a short term fix and more a structural constraint on growth.
