600,000 Kenyans Stop Using Mobile Money Services Over High Taxation, Cybercrime

• The number of Kenyans using mobile money services dropped by 600,000 in the year ending December 2023
• Kenya National Bureau of Statistics (KNBS) reported a significant drop from 38.6 million users in 2022 to 38 million users in 2023
• KNBS Economic Survey Report 2024 attributed the decrease to a number of factors, including taxation and cybercrime

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenyans using mobile money services decreased significantly in the year ending December 2023.

Data from a Kenya National Bureau of Statistics (KNBS) report showed that mobile money usage dropped by 600,000 to 38 million.

Why Kenyans stopped using mobile money

This represented a 1.7% drop from 38.6 million subscribers reported in the year ending December 2022.

The KNBS Economic Survey Report 2024 attributed the decline to a change in user behaviour, patterns of mobile money services and other trends, like cybersecurity and government policies.

"Mobile money subscriptions recorded a first-ever decrease, dropping by 2.58% points to 73.76 per 100 inhabitants in 2023. This downturn is partly attributable to a market saturation point in the mobile money market," read the report in part.

The report indicated that cybercrime activities more than doubled from 700.0 million in 2022 to 1.7 billion in 2023, attributable to system vulnerabilities.

In an exclusive interview with TUKO.co.ke, tech expert Moses Kemibaro explained that cybercrime is expected to be among the forces driving the decline in mobile money subscriptions.

"In line with global trends, it's only going to escalate going forward. Individuals and organisations are always at risk and need to be proactive in protecting themselves from cyber threats. This includes software and practices that can help mitigate risks," said Kemibaro.

Impact of taxation on mobile money

Mobile money taxation followed the Finance Act 2023, which reviewed the excise duty charged on mobile money transfer services from 12% to 15%.

This saw Safaricom increase its service charges, including on mobile money, data, fibre, call and Short Message Service (SMS).

The giant telecommunications company raised the M-Pesa business till tariff from 0.5% to 0.55%.

Other mobile money service providers, including Airtel and Telkom Kenya, followed suit.

Is there further taxation on mobile money?

The Finance Bill 2024 also proposes to raise the excise duty rate on fees for money transfer services provided by banks, money transfer agencies, and other financial service providers.

The cost of airtime and data could also rise as the government seeks to raise an additional KSh 323 billion to finance the 2024/2025 financial year budget.

Safaricom and Airtel charge more to transfer money to banks than to withdraw money from banks to mobile wallets.

If the Bill becomes law, Kenyans will have to dig deeper into their pockets to access financial services.

Proofreading by Nyambura Guthua, journalist and copy editor at TUKO.co.ke.