A growing number of African countries now levy taxes on mobile money transactions. The IMF, the World Bank and the UN Economic Commission for Africa all reach the same conclusion: it is costing more than it yields. Some governments are changing course. Others are still searching for the right balance.
In Uganda, it all came down to a single budget cycle. A daily levy on social media and digital transactions was introduced. The results, documented by the UN Economic Commission for Africa’s 2026 Economic Report on Africa, were swift: more than 2.5 million internet subscribers lost and a 25% drop in mobile money transactions within months. The users hadn’t disappeared. They had simply gone back to cash.
Uganda is far from alone. By the end of 2025, roughly twenty Sub-Saharan African countries had introduced some form of mobile money taxation. Some target transaction values, others operator revenues, others the platforms themselves. No common framework, no regional coordination. Each country running its own experiment — often at the expense of the most vulnerable.
The paradox is stark: while international institutions urge governments to use digital tools as a lever for tax collection, several African governments are still treating mobile money as a direct tax target.
From financial lifeline to tax target
Mobile money now counts more than 2.1 billion registered accounts worldwide, the majority in Sub-Saharan Africa, with over 514 million active users according to the ECA. In Kenya, M-Pesa drove financial inclusion from under 30% to more than 83% in under a decade. Mobile money is no longer just a financial service — it has become economic infrastructure.
It is precisely because that infrastructure became indispensable that tax authorities took notice. Digital transactions are visible, traceable, and their volume has surged since the Covid-19 pandemic. In a continent grappling with high debt, shrinking fiscal space, and declining foreign aid, they look like a convenient revenue stream.
The temptation is understandable. But the outcomes are frequently counterproductive. Academic research and institutional analysis converge: these taxes can reduce usage of digital financial services by as much as 39% in certain contexts, according to the Danish Institute for International Studies. User behaviour is predictable — when costs rise, people consolidate payments, delay transactions, or return to cash.
“The principle is to mobilise revenues while having a limited impact on the poorest segments — relying as much as possible on digitalisation where there are clear benefits.”
Amadou Sy, IMF Africa Department — Spring Meetings, Washington, April 2026
The fiscal paradox: taxing what broadens the base
The case for these levies is fundamentally budgetary: collect where economic activity is visible. It is a coherent argument. It is also profoundly short-sighted.
Mobile money is one of the most powerful formalisation tools African governments have. By making transactions traceable and pulling millions of informal economic actors into identifiable financial circuits, it naturally broadens the tax base. A 2025 study covering 36 African countries establishes a positive correlation between financial inclusion and tax revenues. The more people use digital financial services, the greater the state’s capacity to collect — provided usage is not discouraged.
Taxing transactions, then, is cutting the branch you are sitting on. The ECA’s 2026 report is unambiguous: digital tools should be a lever for tax collection, not a target.
Kenya illustrates the alternative. By integrating mobile money data into AI-driven detection systems, the country reduced VAT fraud by nearly 30% between 2019 and 2021. Mobile money now processes the equivalent of one billion Kenyan shillings per day in public revenue-related payments.
A tax that hits hardest those with no alternative
Behind the numbers is a straightforward social reality: these taxes fall first on those who have no other option.
A three-year study by the International Centre for Tax and Development on Ghana’s e-levy demonstrated exactly this: despite built-in exemptions, the heaviest fiscal burden landed on lower-income households. In a region where more than 85% of jobs are in the informal sector, mobile money is often the only access point to the financial system. For a market trader in Kumasi or a motorcycle taxi driver in Kampala, it is not a convenience — it is an economic survival tool.
Wealthier users have bank accounts. They adapt. Everyone else pays the price — or goes back to cash.
“The cost of data remains an issue. If we truly want our youth to use these technologies, we need to figure out how to make access affordable.”
Stephen Karingi, Director, Macroeconomic Division, UN ECA — Tangier, April 2026
The wrong signal to investors
There is a third consequence, quieter but equally costly: the message sent to investors. Africa is actively seeking large-scale capital for its fintech and digital ecosystems. Yet for many sector players, fiscal instability is a more immediate deterrent than lack of financing. Taxes introduced without industry consultation or abruptly revised create an environment of uncertainty that makes long-term investment unattractive.
At the IMF and World Bank Spring Meetings in April 2026, African leaders pressed the case for investing in digital infrastructure to underpin artificial intelligence and digital financial systems. Taxing digital usage without a coherent strategic vision sends precisely the wrong signal to the investors the continent is trying to attract.
Ghana: a policy reversal with a costly lesson
Ghana offers the clearest example. Long held up as a model of digital financial inclusion, the country introduced an e-levy in 2022 — a 1.75% tax on electronic transactions, later reduced to 1%.
The effects were immediate: transaction volumes fell, users returned to cash, and public opposition was vocal and broad. Both major political parties campaigned on scrapping the tax in the 2024 presidential election. When John Mahama took office, he abolished it on 2 April 2025. Parliament voted unanimously.
But the ICTD points to a less visible consequence: the levy’s abolition also dismantled the digital fiscal data infrastructure built around it. The e-levy’s real potential was never in the revenue it generated — it was in the economic flow data it produced, allowing Ghana’s revenue authority to identify previously unregistered, high-income taxpayers. Ghana ended up losing both the revenue and the tools.
There is a better way
More effective models already exist. Kenya remains the continental benchmark, but others are following. In South Africa, AI-powered compliance and risk management systems generated over 101 billion rands in additional revenues between 2022 and 2023, according to the ECA. Rwanda is developing comparable approaches.
In each case, the logic is inverted: digital tools identify untaxed income rather than taxing the transactions themselves. At the 2026 Spring Meetings, Nigeria presented a similar approach — improving domestic resource mobilisation while simultaneously reducing the fiscal burden on lower-income earners.
The balance is achievable. Tax operators rather than users. Use mobile money data to identify significant informal-economy earners. Connect digital platforms to tax and customs systems. These approaches are documented, tested, and produce more durable revenues without compressing inclusion.
“The question is no longer whether Africans can finance this transformation. It is whether we will do so collectively, strategically, and at scale.”
Claver Gatete, Executive Secretary, UN ECA — Tangier, April 2026
A political choice, not an inevitability
The fiscal pressure pushing African governments toward mobile money taxation is real. In 2025, African governments were spending nearly one fifth of their revenues on debt service. Fiscal space is shrinking. Social needs are growing.
But the short-term yield logic can become a long-term dead end. International institutions, academic research and the accumulated experience of multiple countries now converge on the same finding: excessive mobile money taxation tends to yield less than expected, undermines financial inclusion, and falls hardest on the most vulnerable.
The information problem is solved. The data exists. The alternatives exist.
What remains is a political choice: between the logic of immediate extraction and a long-term strategy of economic transformation — one that treats digital infrastructure not as a source of revenue to be milked, but as a foundation to be protected.
For the millions of Africans that mobile money has gradually brought into the formal economy, this distinction is not abstract. It is measured in daily costs, in the return to cash, and in years lost on the road to financial inclusion.
