ACET recommends tax exemptions on the importation of digital financial equipments

The Africa Center for Economic Transformation is recommending tax incentives such as a two year tax holiday on the importation of equipment used in building digital financial services.

This follows a study by the Center which has revealed that although mobile phones and solar panels are low-cost innovative tools that can help developing economies such as Ghana to provide affordable financial products to the unbanked, taxes imposed on such critical tools overburden service providers with costs, which are passed on to consumers.

The study which was conducted in Sub-Saharan Africa particularly three countries including Zambia, Guinea and Sierra Leone revealed that although the advent of mobile phones has helped improve the penetration of digital financial services to rural areas,  the youth and women in such areas can still not access affordable financial services.

“The majority of the most vulnerable groups are in rural areas. And access to financial inclusion is much weaker. And this is where public policy and regulation are critical in order to provide the right incentives and environment to attract private sector actors into the rural areas,” Dr. Edward Brown, Senior Director, for Research and Policy Advisory Services at ACET told Citi Business News at a presentation of the findings of the study.

ACET says the government’s financial inclusion strategy of increasing rural participation in the financial sector can best be implemented if taxes imposed on the importation of critical digital items are reduced.

The findings of the research were presented to stakeholders including policymakers and academia from various African countries. The Center is also urging the government to reduce the requirements for accessing banking services.

“The brick and motor type of banking is becoming a dead issue. The issue of collateral identification is key but how do you ensure that you provide the most vulnerable like the women some access to financing with much less stringent requirement?”  Dr. Brown noted.

by Nana Oye Walton Ankrah