Taxing Mobile Money in Kenya: Impact on Financial Inclusion

Awa Diouf, Marco Carreras and Fabrizio Santoro

No 18399, Working Papers from Institute of Development Studies, International Centre for Tax and Development

Abstract: Financial inclusion – where individuals and businesses have access to useful and affordable financial products and services that meet their needs, delivered in a responsible and sustainable way – is a critical component of economic development. It is particularly important in sub-Saharan Africa (SSA), where there can be little traditional banking infrastructure. The success of M-PESA in Kenya shows that mobile money is helping financial inclusion in the region. Those in rural or underserved areas can use mobile money to access basic financial services – savings, payments, and credit – through their mobile phones. This is critical for impoverished households, helping them to manage their finances, build resilience, and participate more actively in the economy. Financial inclusion aligns with broader development goals, such as poverty reduction and gender equality, by empowering marginalised groups, including women and small-scale entrepreneurs. However, taxation policies can be a threat to the adoption of mobile money in Africa. This study assesses the short and long-term impact of the Kenyan excise duty on the use of mobile money. Summary of ICTD Working Paper 168.

Keywords: Finance (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-fle and nep-pay
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