Presentation of study on the impact of the mobile money tax on the usage, demand, and perception of mobile money services of Micro and Small Enterprises (MSEs) in Tanzania. Presented at the GRA & ICTD conference "Taxing Mobile Money: Lessons and Ways Forward".

1. The Impact of Mobile Money Taxation
on SACCOS and their Members in
Tanzania
The International Centre for Tax and Development
(ICTD) Workshop: Taxing Mobile Money - Lessons and
ways forward
Accra, Wednesday, 28th February 2024

2. Contents
2
1
2
3
Project Overview
Key Results
Implications to Policy Makers

3. The Impact of Mobile Money Taxation on SACCOS and their Members
in Tanzania
3
Stefanie Pfeil
Lead Researcher
Marius Siebert
Deputy Project
Leader
Bashir Iddi
Co-Researcher
Godwin Salira
Networking
Emanuel Walwa
Junior Researcher
Project
Team
Background
On July 1st, 2021 , the
Tanzanian government
introduced a new tax
specifically targeting mobile
money transactions.
Patriotism Levy . Solidarity Tax
Data and Methodology
Mixed method approach
SACCOS Database
1571 datasets :
651 treatment + 920 Control
Telephone survey
608 datasets:
304 treatment + 297 Control
Why does it matter?
The intersection of mobile
money, MSEs, and
microfinance
 In Tanzania, the MSE sector
employs 5.2 million people.
 Mobile money offered access to
formal financial services for these
MSEs
1
2
Luciana Murimi
Junior Researcher

4. Key Results
4
Increase in repayment amounts
Despite the introduction of the e-levy in Tanzania, our analysis reveals a significant increase
in repayment amounts by 12.7 percent
1
(1) Outcome (2) Outcome (3) (4)
TZS TZS Logs Logs
MoMo*Post 48,236.51* 77,497.72*** 1.74*** 2.53***
(27,207.14) (26,578.86) (0.13) (0.11)
MoMo 42,793.83* -40,000 1.15*** -1.63***
(25,909.57) (26,187.39) (0.13) (0.10)
Post period -29,000*** -4,556.50 -1.53*** -0.62***
(10,494.59) (10,220.67) (0.12) (0.09)
Controls No Yes No Yes
Control Mean 150,000 150,000 8.602 8.602
R-sq. 0.007 0.020 0.171 0.435
Observations 18990 18990 18990 18990
Standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01
DID estimates of e-levy on amount repaid

5. Key Results
5
A low knowledge of the e -levy
Less than 1 percent of respondents are aware of the current mobile money taxation, yet a
significant majority, 73.9 percent , find the tax inequitable .
2
E-levy knowledge disaggregates
0.43
0.08
0.00
0.54
0
0.1
0.2
0.3
0.4
0.5
0.6
Implementation
year
Modification
year
Current rate Transactions
affected
Knowledge Questions
18.5
55.4
15.8
9.3
1
Very unfair
Unfair
Neutral
Fair
Very fair
How fair do you think the e-levy is?

6. Key Results
6
The overall perception of the e -levy is unfavourable
On average, respondents perceive the e-levy to be slightly below the midpoint of the
fairness scale, indicating that many respondents find it somewhat unfair .
The e-levy had a relatively low negative influence on SACCOS’ loan default rate.
3
Variable Obs Mean Std. Dev. Min Max
Agree with introduction of e-
levy (1-5)
601 2.50 1.08 1.00 5.00
How fair do you think the e-
levy is? (1-5)
601 2.19 0.88 1.00 5.00
How satisfied are you with the
policy change? (1-5)
601 2.52 0.86 1.00 5.00
How transparent the use of e-
levy revenues is (1-5)
601 2.21 1.00 1.00 5.00
Do you think the levy can
achieve the policy purposes?
(0/1)
601 0.61 0.49 0.00 1.00
Preferred exemption threshold 257 136,119.46 230,707.66 0.00 2,000,000.00
E-levy influenced SACCOs loan
repayment policies (0/1)
601 0.38 0.49 0.00 1.00
E-levy influenced SACCOs' loan
default rate negatively (0/1)
601 0.14 0.35 0.00 1.00

7. Key Results
7
Demographics vs Repayment knowledge vs E -levy knowledge and Perception
Demographic parameters exhibit limited correlation with repayment behavior, e -levy
knowledge, and perception.
4
Knowledge Correlates

8. Implications to Policy Makers
8
Addressing
Knowledge Gaps
Simplifying information
and providing clear
guidance on
implementation crucial
steps towards
facilitating compliance
and informed decision-
making among MSEs.
Transparency and
Fairness
Addressing concerns
related to
transparency, fairness,
and policy
effectiveness is
essential for building
public acceptance and
support for the levy.
Promoting DFS
Integration
While Mobile Money
remains a popular
financial tool, there
remains a significant gap
in integrating digital
financial services (DFS)
within the cooperative
sector.
Demographic
Variances
Demographic
parameters exhibit
limited correlation with
repayment behavior and
e-levy knowledge,
highlighting the
complexity of factors
influencing these
aspects

9. Discussions and Questions
9
Q
A

10. Stefanie Pfeil
Lead Researcher &
DSIKDeputy Country Director Uganda
stefanie.pfeil@sparkassenstiftung.de
and
Luciana Murimi
Junior Researcher &
Digitalization Advisor Tanzania
luciana.murimi@sparkassenstiftung.de
Thank you for your
attention &input!