Kenya’s Budget 2024/25: Excise Duty on Mobile Money Retained

In a bid to maintain support for the retail electronic payments ecosystem, Treasury Cabinet Secretary Njuguna Ndung’u has proposed to retain the excise duty on mobile money transfer services at 15 per cent. This proposal was made during the reading of the 2024-25 financial year budget statement in Parliament on Thursday.

The excise duty applies not only to mobile money transfers but also extends to telephone and internet data services, fees charged on money transfer services by banks, fees charged by agencies and other financial service providers, as well as fees charged by cellular phone service providers.

“I propose to retain the excise duty rate of 15 per cent on fees charged on money transfer services by cellular phone service providers to benefit the retail electronic payments ecosystem,” Ndung’u stated during his address to Parliament.

The proposed budget for the 2024/2025 financial year is estimated at KSh 3.91 trillion. This substantial budget includes KSh 1.58 trillion allocated for recurrent expenditure, KSh 727.9 billion for development expenditure, KSh 1.21 trillion for consolidated fund services, and KSh 400 billion for the county equitable share.

To finance this ambitious budget, the government aims to collect KSh 2.91 trillion from ordinary revenue sources and an additional KSh 441 billion from ministerial appropriations in aid. Despite these efforts, there remains a projected deficit of KSh 508.9 billion.

To bridge this gap, the National Treasury plans to borrow KSh 257.9 billion from domestic lenders. The remaining KSh 256.7 billion will be sourced from international lenders.

This budget proposal underscores the government’s strategy to balance fiscal responsibility with the need to support key sectors, including the growing electronic payments ecosystem. By retaining the 15 per cent excise duty on mobile money transfers and related services, the government aims to ensure a steady stream of revenue while promoting the widespread use of digital financial services.

The proposed budget and the associated excise duties are likely to have significant implications for both consumers and service providers in the financial sector. As the government seeks to enhance revenue collection and manage expenditure effectively, the retention of the excise duty on mobile money transfers reflects a broader commitment to leveraging technology for financial inclusion and economic growth.

The discussions and decisions made during the reading of the budget statement will shape Kenya’s economic policies and priorities in the coming fiscal year, highlighting the critical role of fiscal measures in driving development and ensuring financial stability.