Commercial banks have announced an increase in transaction fees of 18 per cent effective today.
Stakeholders say the increase threatens to reverse gains made in financial inclusion in the country.
Banks
have announced that fees charged on services such as withdrawals would
increase following the government’s decision to impose 18 per cent value
added tax (VAT) on the charges.
The
government is targeting the billions of shillings banks have been
earning in transaction fees, but, as expected, the additional cost has
simply been passed on to customers.
This,
in turn, would increase the tax burden on low income earners, making
banking a costly undertaking, according to stakeholders.
Records
show that the five biggest banks raked in Sh58 billion in fees and
commissions in the first three months of this year, making the earnings a
significant part of their profits.
The
government has also introduced a 10 per cent excise duty tax on mobile
money transfers, leaving people with no viable alternatives.
Previously, only mobile withdrawals were charged.
Mobile
money helped to bring the majority of the unbanked population into the
financial network, thus increasing financial inclusion to 40 per cent
from 17 per cent in 2011, according to the Bank of Tanzania (BoT).
Transaction
fees are charged on various banking services such as the depositing or
withdrawal of cash, balance inquiry, ATM use, ATM card issuance and the
transfer of money among banks or to mobile platforms.
The charges usually range from Sh250 to Sh20,000, or slightly more, depending on the type of services and bank policies.
