Kenya’s proposed Finance Bill 2026, which includes a new 16% value-added tax on fees for mobile money transfers, has raised concerns about its potential impact on the growth of M-Pesa, the country’s dominant mobile money platform operated by Safaricom. The tax, which would apply to transfer fees paid by senders, is part of a government effort to raise revenue but has drawn warnings from analysts and industry observers about its broader economic effects.

The proposal comes as Safaricom is actively expanding the accessibility of its M-Pesa service. In a recent strategic move, the company opened its M-Pesa Super App to users on rival mobile networks in Kenya and to members of the Kenyan diaspora abroad. This initiative, which requires users to register with a valid Kenyan ID or passport, is designed to capture a wider user base and facilitate cross-border remittances, a key growth area for the platform.

Analysts argue that imposing VAT on transaction fees could counteract these expansion efforts and slow the adoption of digital payments. “The proposed VAT on M-Pesa risks hurting the digital economy,” said a financial analyst cited in a report on the bill. The concern is that increased costs for consumers, particularly for low-value transactions that are common among lower-income users, could push some back to using cash, thereby undermining Kenya’s progress on financial inclusion.

M-Pesa, launched in 2007, has been central to Kenya’s digital finance landscape, enabling millions of previously unbanked citizens to save, borrow, and transfer money via mobile phone. Its ecosystem supports a vast network of small businesses and agents. The platform’s growth has been a model for mobile money across Africa, contributing significantly to Safaricom’s revenue. Any measure perceived as dampening its usage is therefore closely scrutinized for its wider economic implications.

The government’s push for new revenue sources through digital services taxation is not unique to Kenya, as several African nations grapple with fiscal pressures. However, the specific targeting of mobile money transfer fees places a direct cost on a service that has become a utility for daily economic life. Critics of the tax suggest it may prove counterproductive, potentially reducing overall transaction volumes and the associated tax base from a thriving digital sector.

Safaricom has not issued a public statement specifically on the 2026 tax proposal. The company’s recent technical expansion, allowing non-Safaricom network users and diaspora Kenyans to access the M-Pesa app, indicates a clear growth strategy focused on interoperability and regional financial integration. The success of such strategies often depends on maintaining low barriers to entry and cost-competitive services.

The final shape of the Finance Bill 2026 will be determined through parliamentary debate, offering a window for industry lobbying and public consultation. The outcome will be closely watched by fintech operators across the continent, as it may set a precedent for how governments balance revenue generation with the nurturing of digital economies that have become critical engines of financial inclusion and economic activity.