September 13, 2018
LUSAKA, ZAMBIA — Lucas Mwape has a bank account, but he has been hesitant to use it since last year, when the bank requested that he obtain a taxpayer identification number (TPIN).
A TPIN is a computer-generated identification number assigned to a taxpayer. It is a prerequisite for individuals and companies to file tax returns, says Topsy Sikalinda, corporate communications manager for the Zambia Revenue Authority.
However, Mwape is worried that a TPIN will enable the government to collect additional taxes from him.
He opted to do his financial transactions via his mobile network provider rather than through his bank, because using such mobile money transactions does not require a TPIN.
“I am scared that I might be taxed for things I don’t know, [that] these TPIN numbers could be another form of tax,” Mwape says.
The government says that TPINs have nothing to do with taxation.
Prudence Phiri, GPJ Zambia
Still, Mwape is just one of many Zambians choosing to turn away from banks and toward his phone when handling funds. Whether due to a lack of trust in traditional banking or to the convenience and accessibility of mobile money, phone-based transactions are a burgeoning market in the country. But mobile banking does have limitations.
Mobile money allows users to store, receive, transfer and spend funds via their phones. They can also visit storefront locations to withdraw cash from their accounts.
From 2015 to 2017, the number of active mobile money agents – vendors who facilitate transactions – more than doubled in Zambia, according to data from the United Nations Capital Development Fund.
As of March 2016, the nation had 5.92 million registered digital transaction accounts, compared with 2.9 million registered bank accounts, according to Zambia’s National Financial Inclusion Strategy 2017-2022 (NFIS).
“Indeed, Zambia is now one of 19 economies with more digital transaction accounts than bank accounts,” according to the NFIS, citing data from the Groupe Speciale Mobile Association, which represents mobile operators worldwide. The NFIS also outlines information from the 2016 World Bank Financial Capability Survey dealing with why Zambians don’t use banks – 15 percent of unbanked adults cite “a lack of trust” as the explanation.
That’s Mwape’s reason.
“I was told that the TPIN has nothing to do with tax, but why should it be attached to my account?” he says.
In January 2017, the Zambia Revenue Authority made it mandatory for every bank account holder to have a TPIN, with the stipulation that accounts to which no TPIN was attached would be closed by June 30, 2018. That deadline has since been extended to Dec. 31.
Leonard Mwanza, the chief executive officer of the Bankers Association of Zambia, says TPINs are not used to tax customers but will only help the revenue authority increase tax compliance.
He is aware of public suspicion about TPINs.
“The reality is that, to date, there is no customer who has come forth to claim that they had their bank balances taxed upon submission of their TPIN to the bank,” he says. “Therefore, this myth is unjustified and unfounded.”
For some Zambians, mobile money is just easier than traditional banking.
Titamenji Banda says the idea of all the paperwork kept her from opening a bank account. She had 15,000 Zambian kwacha ($1,452) that she wanted to put away, but she thought twice about going to a bank.
“I needed to save the money, but the process at the bank sounded complicated, especially with the TPIN issues,” Banda says. “I ended up opening a mobile money account, which was very easy; I just needed my national registration card to register.”
The main drawback to mobile money is the limit on the funds an account can hold.
Mwape says his mobile money account can only hold a maximum of 20,000 kwacha ($1,934) – that’s the maximum holding balance for an individual, according to the Bank of Zambia, the central bank.
“I imagine having more than [20,000 kwacha], I will be forced to get back to the bank,” he says.
Experts, meanwhile, are positive about the popularity of mobile money in Zambia and believe it can coexist with the traditional banking sector.
Mwanza says banks have developed partnerships with mobile network operators, which allow for the seamless movement of funds from customers’ bank accounts to mobile money accounts offered by the operators.
“Digital finance has arrived and is here to stay and is already proving to be one of the main channels of facilitating payments in the country,” Mwanza says. “Most banks have deployed mobile banking channels on their platforms.”
Andrew Chibuye, a financial expert working with PricewaterhouseCoopers, agrees.
“Mobile money should not be seen as a competitor to the banking sector; it is here to complement the banking sector,” he says.
Prudence Phiri, GPJ, translated some interviews from Nyanja.