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Zimbabwe is hiking mobile money taxes to plug its fiscal deficits



Mthuli Ncube

Cash-strapped Zimbabwe has turned to mobile money for additional treasury funding with a hike in taxes for mobile wallets and electronic payment transactions.

Zimbabwean business owners and consumers in the country say the new fiscal measure will push up costs in an economy already battling rising inflation and currency shortages in a country with a history of cash shortages, multiple currencies and hyperinflation, mobile money had become a key payment alternative.

Cash is hardly ever accessible in Zimbabwe as banks frequently run out of monetary notes, leaving mobile money and bank cards as the only transaction options.

But it now appears mobile money, dominated by leading mobile operator Econet’s EcoCash with a 96% market share, could be made a victim of its own success.

The recently appointed finance minister, Mthuli Ncube, said the tax on the mobile wallet and electronic transactions will increase from a flat five cents per transaction to two cents per each dollar transacted.

This would be a reduction if all you ever transacted was one dollar but a significant increase beyond that.

Zimbabwe hopes the restructuring of the taxes will raise additional funds for the government which is battling fiscal deficits. Ncube has explained that such measures, although hard to bear, will enable the government to mobilize funds for the treasury.

Mobile money has been one of the few significant successes in Zimbabwe’s troubled economy over the last decade. The introduction of the bank to wallet transfers has spurred mobile money usage, according to the telecoms regulator.

It said the total number of active mobile money subscriptions increased by 12.6% to reach 5.6 million at the end of the second quarter.

The government stands to rake in the earnings, especially as the mobile money merchant, airtime and bill payments values increased by 45.3% in the second quarter 2018 to $1.1 billion compared to the first quarter period.

The number of mobile money transactions had also risen by 38% to about 404 million. This effectively means that the government of Zimbabwe previously earned about 5 cents from a transaction of about $100 but now earns around $2 for transactions worth the same amount.

There has been dismay over this, with Zimbabweans taking to social media to condemn and register frustration over the tax hike.

Econet Wireless, which runs the dominant mobile wallet, EcoCash, has initiated the unbundling of the platform with a view to separately list it on the Zimbabwe Stock Exchange.

Analysts at IH Securities said this week that the fin-tech divisions of Econet – including mobile insurance – have become valuable assets worth separating from the mobile telephony services.

“We believe that the fin-tech division is an attractive stand-alone asset and as at FY18 revenue in this SBU was $244 million.

As the cash constraints persist, EcoCash remains well positioned to maintain its strong growth trajectory,” IH Securities said in a market note.

Industrialists in Zimbabwe have complained about the mobile money tax increase, with the Confederation of Zimbabwe Industries explaining that “this tax will compound through the value chain” with the consequence that there will be a 2% charge at each value chain stage.

Mthuli Ncube Money Transfer Tax

“This will prejudice the competitiveness of Zimbabwe value chains against foreign value chains. We believe that this can be effectively mitigated by a cap (monetary value) on the charge (per transaction),” said Sifelani Jabangwe, president of the Zimbabwe industrialists grouping.

The tax hike on mobile money in Zimbabwe follows Uganda which introduced a controversial mobile money and social media tax earlier this year but has now has reduced the mobile money levy from 1% to 0.5% for cash-outs.

The Ugandan parliament also voted in favour of abolishing mobile money taxes for ‘sending, receiving and depositing money into mobile wallets.

Other African governments such as Kenya have, however, also raised mobile money taxes, with Kenya hiking mobile money statutory levies from 10% to 12% in June.

Quartz Africa


African Union’s Inclusion in G20: A Significant Acknowledgment of a Continent with 1 Billion Inhabitants




The world’s most powerful economies, the G20, have welcomed the African Union (AU) as a permanent member, recognising Africa’s more than 50 countries as important players on the global stage. US President Joe Biden and Indian Prime Minister Narendra Modi both expressed support for the AU’s permanent membership.

The AU has advocated for full membership for seven years and, until now, South Africa was the only African country in the G20. The AU represents a continent with a young population of 1.3 billion, which is set to double by 2050 and make up a quarter of the world’s population.

Africa’s 55 member states have long pushed for meaningful roles in global bodies, including the United Nations Security Council, and want reforms to the global financial system. The continent is increasingly attracting investment and political interest from global powers like China, Russia, Gulf nations, Turkey, Israel, and Iran. African leaders are challenging the framing of the continent as passive victim and want to be brokers instead.

They seek fairer treatment by financial institutions, delivery of rich countries’ long-promised $100 billion a year in climate financing for developing nations, and a global tax on fossil fuels. The AU’s full G20 membership will enable it to represent a continent that’s home to the world’s largest free trade area and abundant resources needed to combat climate change. The African continent has 60% of the world’s renewable energy assets and over 30% of the minerals key to renewable and low-carbon technologies.

African leaders want more industrial development closer to home to benefit their economies. Finding a common position among the AU’s member states, from economic powers to some of the world’s poorest nations, can be challenging, but Africa will need to speak with one voice to influence G20 decision-making. African leaders have shown their willingness to take collective action, as seen during the COVID-19 pandemic. As a high-profile G20 member, Africa’s demands will be harder to ignore.

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Forging Strong Bonds: Iran and Zimbabwe Deepen Economic Ties in Raisi’s Africa Tour



Zimbabwe and Iran

On Thursday, Zimbabwe and Iran signed 12 memorandums of understanding to strengthen their bilateral ties during Iranian President Ebrahim Raisi’s visit to Africa. Raisi had previously visited Kenya and Uganda before meeting with Zimbabwean President Emmerson Mnangagwa in Harare. Among the 12 MOUs is a plan to establish a tractor manufacturing plant in Zimbabwe with the help of an Iranian company and a local partner. The two countries also signed agreements for cooperation in energy, agriculture, pharmaceuticals, and telecommunications, as well as research, science, and technology projects.

Mnangagwa expressed his appreciation for investments in several sectors of Zimbabwe’s economy to reporters after the signing ceremony. However, he did not disclose the amount of investment Zimbabwe is expecting from Iran. Raisi mentioned the economic challenges facing Iran and Zimbabwe due to U.S. sanctions but emphasised his country’s efforts to build closer economic ties.

According to Iran’s foreign ministry, trade with Africa is expected to exceed $2 billion this year, but there was no comparison to the previous year’s figures. This African visit is the first by an Iranian leader since 2013, following a visit to three Latin American countries in June, all of which are also affected by U.S. sanctions.

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Breaking News: E-Creator Fraud Ring Leader Apprehended by Police



Zhao Jiaotong

The Zimbabwe Republic Police is requesting that individuals who have been deceived by E-Creator, Zhao Jiaotong come forward and report to the nearest police station.

According to police spokesperson Assistant Commissioner Paul Nyathi, the kingpin of the E-Creator Ponzi scheme has been arrested on charges of fraud. The suspect is identified as Chinese national Zhao Jiaotong, who is said to be the founder of the notorious platform that has scammed people out of thousands of dollars.

Nyathi stated, “The Zimbabwe Republic Police confirms the arrest of Zhao Jiaotong, 39, in connection with a case of fraud in which unsuspecting members of the public were duped through the E-Creator Ponzi scheme.”

The police are urging anyone who may have fallen victim to E-Creator to report to their nearest police station. Additionally, the public is encouraged to exercise caution and perform thorough research before investing in any Ponzi or pyramid schemes that promise quick returns.

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