18/03/2026
๐ฃ๐ผ๐๐ถ๐๐ถ๐ผ๐ป ๐ฆ๐๐ฎ๐๐ฒ๐บ๐ฒ๐ป๐ ๐ผ๐ป ๐๐ต๐ฒ ๐๐ป๐๐ฟ๐ผ๐ฑ๐๐ฐ๐๐ถ๐ผ๐ป ๐ผ๐ณ ๐๐ต๐ฒ ๐โ๐๐ฒ๐๐ ๐ผ๐ป ๐ ๐ผ๐ฏ๐ถ๐น๐ฒ ๐ ๐ผ๐ป๐ฒ๐ ๐ฆ๐ฒ๐ฟ๐๐ถ๐ฐ๐ฒ๐ ๐ฎ๐ป๐ฑ ๐๐ฎ๐ป๐ธ๐ถ๐ป๐ด ๐ง๐ฟ๐ฎ๐ป๐๐ณ๐ฒ๐ฟ๐
Issued by: Association for Digital Financial Services โ Malawi (ADFS)
Date: 18th March 2025
The Association for Digital Financial Services Malawi (ADFS), launched in May 2025, represents licensed digital financial service providers including banks, mobile money operators, FinTechs, MFIs, and other payment service providers. ADFS exists to promote an inclusive, secure, and efficient digital financial ecosystem aligned with Malawiโs long-term economic and social development goals. The Association collaborates closely with regulators, policymakers, development partners, and related industry bodies in pursuit of these objectives.
ADFS wishes to formally express its position on the recent decision by the Government of Malawi to introduce a 0.05% levy on mobile money and banking transfers. While the Association recognises the governmentโs intention to broaden the tax base amid fiscal constraints+, we are concerned that the levy is counterproductive to Malawiโs financial inclusion and digital economy ambitions.
๐๐๐ฟ๐ฟ๐ฒ๐ป๐ ๐๐ผ๐๐ฒ๐ฟ๐ป๐บ๐ฒ๐ป๐ ๐ฅ๐ฒ๐ณ๐ผ๐ฟ๐บ๐
ADFS wishes to applaud Government for the recent proclamation regarding automating most Government functions, especially the collection of non-tax revenues. We are excited to note the quest to eliminate cash transactions across all MDAs that are intended to enhance transparency, reduce leakages, and improve accountability. To this effect, we applaud Government for setting 1st April 2026 as a start date for citizen to government (C2G) digital payments. This move will enhance usage of digital financial services.
๐๐บ๐ฝ๐ฎ๐ฐ๐ ๐ผ๐ณ ๐-๐๐ฒ๐๐ ๐ผ๐ป ๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐๐ป๐ฐ๐น๐๐๐ถ๐ผ๐ป ๐๐ณ๐ณ๐ผ๐ฟ๐๐
Malawiโs financial inclusion gains over the past decade have been driven largely by the expansion of mobile money services. Formal financial access increased from 31% in 2012 to 88% today, with most of this growth attributable to digital financial services. In contrast, bank account ownership has grown marginally, and insurance pe*******on remains low at 2.5%.
The current National Strategy for Financial Inclusion III (2024โ2028) targets:
โข 95% adult access to at least one formal financial service, and
โข reducing financial exclusion from 12% to 5%.
These targets and broader national goals such as the Malawi Digital Economy Strategy are at risk with the introduction of the e-levy. The intended C2G digital payments are also at risk. Even a seemingly small 0.05% levy discourages digital transactions, particularly among rural and low-income users whose margins are already thin. The levy risks driving consumers back to cash, undermining trust in digital channels and reversing years of progress and exacerbate the already high cost of money printing and handling by the Reserve Bank of Malawi (RBM) to satisfy the demand for cash country.
๐ฅ๐ฒ๐ด๐ถ๐ผ๐ป๐ฎ๐น ๐๐ฒ๐๐๐ผ๐ป๐ ๐ฎ๐ป๐ฑ ๐ฅ๐ถ๐๐ธ๐ ๐ผ๐ป ๐-๐๐ฒ๐๐
Experiences from peer African countries show that eโlevies can unintentionally suppress digital financial activities and goals:
โข Uganda: E-Levy on mobile services led to an immediate decline in digital transactions and pushed users toward informal financial channels, disproportionately affecting low-income groups.
โข Ghana: The introduction of a 1.75% eโlevy (later reduced to 1.0%) resulted in a significant drop in mobile money usage and a reported 12% decline in MTNโs mobile money revenue within six months of implementation. The E-Levy was subsequently removed.
โข Tanzania: Public backlash following a levy introduced in 2021 prompted government revisions and a partial withdrawal in 2023, yet transaction volumes still fell.
โข Cameroon: The IMF warned that its 0.2% levy was regressive and would disproportionately harm the poor.
These examples illustrate a consistent pattern: mobile money and banking transfers taxes weaken digital ecosystems, reduce transaction volumes, and hinder financial inclusion.
๐๐๐๐ฆ ๐ฃ๐ผ๐๐ถ๐๐ถ๐ผ๐ป ๐ฎ๐ป๐ฑ ๐ฅ๐ฒ๐ฐ๐ผ๐บ๐บ๐ฒ๐ป๐ฑ๐ฎ๐๐ถ๐ผ๐ป๐
ADFS firmly believes that revenue generation efforts must be balanced with policies that are equitable, that preserve the affordability and attractiveness of digital payments especially for low-income households. Maintaining momentum in financial inclusion and digital transformation is essential for sustainable economic growth, job creation, and resilience. It also requires collaborative efforts with the industry.
๐๐ ๐ฉ๐๐๐ง๐๐๐ค๐ง๐ ๐ง๐๐๐ค๐ข๐ข๐๐ฃ๐:
1. Full removal of the 0.05% eโlevy, given its regressive and detrimental impact on digital financial adoption and overall economic growth.
2. Exploration of alternative, sustainable fiscal measures that leverage digital platforms without penalizing usage.
3. Equitable application of policies in the digital financial services industry โ mobile money providers and banks are serving the same clientele.
4. Engagement with ADFS to assess feasible nonโdistortive revenue options.
ADFS would like to notify the general public that it is amidst engagements with the Government and all relevant stakeholders on the matter.
William Kaunda
ADFS Chairperson
Lumbani Gondwe
ADFS Vice Chairperson
