TNM clarifies it’s pricing on bank-related digital products and services

Thorough-out pioneer and leading flagship mobile phone network operator, Telecom Networks Malawi (TNM) Plc has clarified that charges to banks that use its network services are affordable and discounted.

The clarification follows a meeting between TNM Plc and Budget and Finance Committee of Parliament on Wednesday, August 4th 2021 at which the operator was invited to respond to allegations of exorbitant pricing for bank-related digital products and services raised by the commercial banks through the Bankers Association of Malawi (BAM) to the committee in April 2021.

TNM CEO Anold Mbwana: We provide services to commercial banks at negotiated and discounted rates.

TNM Chief Executive Officer (CEO) Arnold Mbwana said TNM provides services to commercial banks at negotiated and discounted rates and that the lower cost was helping Malawi’s financial sector players reduce their cost of operating branch services in general.

To drive his point home on the cost of banking services in Malawi and the telco services that power digital related banking services, Mbwana said that TNM’s current service charge to the banks is at a discount of up to 37.5%.

Mbwana said at the current rate, the TNM mobile network platform is helping banks reduce operating costs as they are able to reduce physical contact with customers at branches and other key points of service.

He said some of the rates such as SMS charged by TNM on banks are below the market premium, and which the banks could not provide at any cheaper rate using banking halls or any of their other technologies.

“It must be noted that digital banking goes a long way in reducing queues in the banking halls thereby enabling banks to cut on costs of constructing or renting new banking halls, branches and all the staff and utility costs,” he said.

TNM currently provides various network services to eight commercial banks, key of which are SMS and the USSD (short code) service.

“In case where the customers require to use online banking and mobile apps, they actually pay their own internet costs to mobile network providers to access the bank’s digital services online,” clarified the CEO.

Mbwana also pointed to the high tax burden and lack of relief thereon, regulatory levies and fees, distance from the sea, currency fluctuations and cost of international internet gateway as some of the factors influencing current pricing of mobile network services pricing in Malawi.

He therefore appealed to both Parliament and Government to exercise equity and flexibility in the implementation of taxes as one way of easing costs to the end user.

“While it would be expected that there will be more support towards digital financial services, especially during the COVID-19 pandemic, Parliament has recently passed the VAT (Amendment) Bill which specifically excludes banking services that are not licensed under the financial services laws, such as mobile money services, from VAT exemption, yet mobile money services serve the most poor and vulnerable of our communities. Does this support the financial inclusion agenda?” wondered the TNM CEO.

Mbwana further pointed out that taxes on mobile phone operators are punitive and loaded, which does not give TNM Plc breathing space.

Key taxes paid by TNM customers include excise on data, VAT on devices and data, media levy and spectrum fees among others.

In Malawi, people have been paying around 87% of gross national income per capita for 1GB of mobile data. Rwandans only pay 2%. DW examines the reasons for this huge price discrepancy.

The smartphone and the internet play the same crucial role for many Malawians as they do for most Africans in their 30s.

“Everything I do revolves around the internet. I make calls mostly using WhatsApp, which uses the internet,” said Anthony Gwiramwendo, a tour guide in Cape Maclear in the Lakeshore District of Mangochi.

Malawi has the most expensive mobile internet rates in Africa – an extreme example for inflated prices – one gigabyte of mobile data costs an average of $27.41, according to Cable UK.

The United Nations recommends that this amount of data should cost no more than 2% of gross national income per capita but in Malawi the equivalent cost is a staggering 87%.

According to the UN, a major cost factor for providers is the infrastructure because operators has had to upgrade from 2G to 3G then from 4G to now 5G.

Another factor is much more difficult to prove with data: mobile phone prices also depend on the policies of the individual country.

Perhaps the biggest question are; is the government willing to help providers? Is the government willing to make access more affordable to the general public and help cover remote areas?

However, it is not just the cost of mobile services that is an issue in Malawi.

Many consumers also want the providers to give them value for their money by improving the quality of service they get.

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