Gambling enthusiasts in Kenya sunk Sh169.1 billion into bets through M-Pesa in the year to March—an indication of the windfall the National Treasury could yield from the industry through its proposed 20 percent excise tax on gaming.
Data by Safaricom revealed that 732.29 million betting transactions were paid for through M-Pesa in the financial year ended March as more Kenyans tried their luck in betting at a time the economy is struggling to recover fast enough from the lingering effects of the Covid-19 pandemic, which has slowed job creation.
The value of bets placed via M-Pesa during the period marked a 23.8 percent increase from the Sh136.58 billion in the previous year despite heavy taxation by the government to regulate the sector, which has been under the radar as a front for money laundering.
Betting transactions earned the telco Sh5.98 billion in revenue, a 40.4 percent growth from the Sh4.26 billion they earned in the previous year growing the company’s earnings from payments.
The Treasury in July last year reintroduced excise duty on betting and gaming at a rate of 7.5 percent of the amount staked through the Finance Act 2021 in a move that was tipped to discourage punters from the habit.
A 20 per cent excise tax was initially introduced in 2019 and saw several betting firms pull out of the local market but was removed in July 2020 through the Finance Act, 2020.
But barely a year later, the Treasury Cabinet Secretary Ukur Yatani has proposed to raise the tax further from 7.5 percent to 20 percent in proposed changes to the Excise Duty Act through the Finance Bill 2022.
The tax is part of new proposals by the Treasury that target to raise Sh50.4 billion in new revenue to help fund Sh3.31 trillion budget for the financial year starting July 2022. “The First Schedule to the Excise Duty Act, 2015 is amended … in Part II (on excisable services) by deleting the expression ‘seven-point five percent’… and substituting therefor the expression ‘twenty percent’,” proposed Mr Yatani in the Finance Bill 2022.
Safaricom’s total M-Pesa revenue grew strongly by 30.3 percent to Sh107.69 billion during the year even as the average monthly revenue generated by each user of the service grew 18.9 percent underlining the increasing reliance on M-Pesa for money transfer and business payments.
The company yesterday announced a 1.7 percent profit drop for the financial year ended March of Sh67.49 billion attributed to costs relating to the ongoing establishment of its Ethiopia unit that is in its first year of operation.