Latif, Lyla (2020) The taxation of financial technology in Africa. Working Paper. Nairobi, Kenya: Tax Justice Network Africa.

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Abstract

About 1.7 billion adults remain unbanked and almost all the unbanked adults live in developing countries (Global Findex Database 2017). This gap has been filled by mobile phones and the internet that have created new opportunities for providing financial services to the unbanked. Consequently, 58% (765 million) of sub-Saharan Africans now have registered mobile accounts (Mauritius Africa FinTech Hub), which they use as payment, lending and remittances platforms. The development of mobile phones from simple text messaging and provision of mobile money accounts to the creation of apps through which access to credit, cross border transfers, remittances, and issuance of digital currency is facilitated has transformed the structure of the financial industry in Africa. The use of technology for the provision of financial services has changed the way Africans store, save, borrow, invest, move, spend and protect money (Skan, Dickerson and Gagliardi 2016). Gallup data collected by McKinsey & Company in 2014 on 44 nations in sub-Saharan Africa showed that an average of 54% of adults utilised FinTech to make payments totalling approximately 5 billion transactions annually.
The total volume of these flows was estimated at $760 billion (of which 50-60% of the transaction were in cash). If a conservative estimate of revenues at 2% of volume is applied, it would result in annual revenues of about $6.6 billion from electronic payments alone. It is now estimated that the FinTech industry in Africa by 2022 will contribute between $200 million to $3 billion in revenues annually. This demonstrates that the correlation between FinTech and revenue mobilisation is quite strong. It thus becomes necessary to understand whether and how FinTech in Africa is taxed. This working paper discusses two interrelated themes: the regulation and subsequent taxation of FinTech. It is argued that the domestic and international regulatory framework within which FinTech operates guides its tax architecture. Whether it is then advisable to adopt a common African approach to the regulation and taxation of FinTech or to advocate for individual African nations to enact bespoke FinTech laws is the core aim that this working paper sets out to discuss.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HJ Public Finance K Law [Moys] > KR Africa
Divisions:	Faculty of Social Sciences > School of Law
Publisher:	Tax Justice Network Africa
Place of Publication:	Nairobi, Kenya
Official Date:	14 May 2020
Dates:	Date Event 14 May 2020 Published
Number of Pages:	41
Institution:	University of Warwick
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access (Creative Commons)
Date of first compliant deposit:	15 September 2021
Date of first compliant Open Access:	15 September 2021
Related URLs:	Publisher
Open Access Version:	Publisher

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