A new government tax on electronic money transactions introduced on January 1, 2022, in Cameroon, has been met a backlash from citizens due to the substantial rise in costs. With 26.5 million people, more than half of the country’s population is unbanked and relies on electronic forms of financial transactions – mainly mobile.

The novel tax set at 0.2% has increased the cost to send and withdraw money among users. According to the new finance law, the tax is applied to all transactions carried out through all the traceable platforms excluding bank transfers and electronic transactions carried out to pay
taxes and customs duties.

An entrepreneur and business consultant, Dr. Javnyuy Joybert, told Thampers Media that the tax comes to augment the ever-increasing fees associated with electronic transactions which have been a burden to many ordinary Cameroonians.

Dr. Javnyuy Joybert- Raising Concerns

He described the tax as a ‘smart’ move from the government given that they are instituting it at a time when mobile money is well established with almost every adult owning a mobile money account.

“However, a government with the right strategy should always be intentional in seeking ways to remove barriers that can hinder the movement of money, people, and goods. It is the movement of cash that makes an economy. This tax will no doubt reduce the flow of money. People will hoard money more or minimize how they frequently send money through mobile
money platforms to pay for services like they use to do,” explained Dr. Javnyuy.

The severe outcry against this finance law, he added, stems from the fact that mobile money is massively used by the middle class that is highly unbanked and small and medium-sized enterprises (SMEs).

“This new tax will increase expenses for individuals and reduce the already thin profit margins for small businesses that depend heavily on mobile money platforms to receive payments and make financial transactions. The tax is regressive when it comes to the promotion of innovation
around FINTECH and E-Commerce, and will slow down financial inclusion, especially among people in rural and semi-urban areas.”

“Cameroon has just 11% bank penetration, meaning the majority of the citizens depend on these platforms to move money within the country. This move by the government will make the growth of digital businesses relying on platforms like these more difficult,” he lamented.

The prospect of the tax has been a long way coming but many overlooked it. The anger against this move has been amplified in the way that this was announced to most users with a simple text message from one of the telecom companies – which many have criticized for lacking in details.

“Dear valued client, in the application of the Finance Law, starting 01 January 2022 0.2% tax is applied to transfers and withdrawals. Thanks for your understanding,” read the text message.

The uproar against such a move by the government has been palpable. A new hashtag – EndMobileMoneyTax – has been trending among Cameroonian social media users who are pushing against the tax whose brunt will fall directly on ordinary people struggling every day to make ends meet.

“So I (…) think we’re approaching this from the wrong end. Our taxes will always increase because the government is simply spending too much, wasting too much. So even if we campaign against this tax today, there will be others tomorrow. Taxing without accountability,” tweeted Rebecca

Rebecca Enonchong, Frowns at taxation without accountability

Enonchong – Cameroonian tech entrepreneur and CEO of AppsTech.

The enormous condemnation of the tax stems from the country’s long history of mismanaging taxpayers’ money.

The new tax targets all electronic transfers of which mobile money constitutes a major part. This means people doing Western Union, Express Union and other forms of electronic transfers like wire transfers will also bear the brunt of this tax.

The Cameroon Taxpayers Association issued a statement denouncing the move as double taxation.

New tax on electronic money transactions

“The tax is levied when the funds are sent but also withdrawn. So, when you send XAF10, 000 to someone, you will incur a 0.2% tax. When withdrawing the funds you were sent, you will also incur the 0.2% tax. This is another way to hinder the development of electric money and discourage electronic money transactions. Money transfers are already subjected to the VAT and now this tax is introduced,” said Mazou Mouliom, Cameroon Taxpayers Association chairperson.

Mazou Mouliom – Government Should Drop the Mobile Money Tax

In 2020, the COVID-19 pandemic triggered a substantial decline in economic activity. According to the World Bank, “household and business income losses linked to social distancing measures and the uncertainty surrounding the course of the pandemic led to a sharp decline in consumption.

“It is estimated that the crisis increased the extreme poverty rate from 24.5% in 2019 to 25.3% in 2021.”

Cameroon is not the only African country to tax electronic money transactions including mobile money. TanzaniaUganda, the Democratic Republic of Congo, Malawi, and Cote D’Ivoire similarly introduced taxes that were met with public rejection. In Uganda, a 1% tax hike was cut down to 0.5% after criticisms. Some months later it was announced that the overall industry transaction values had dropped by 24%. 

About 30% of Cameroon’s population live below the poverty line and such a tax is expected to further exacerbate their plight.

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