In a pre-emptive strike against a looming government tax grab, mobile money unicorn Wave has declared it paid over 30 billion CFA francs (around $50M) in taxes in Senegal for 2024. The announcement has thrown fuel on an already raging fire as the country’s new administration prepares to introduce a levy on digital transactions, pitting the state’s dire need for cash against the fintech sector that has become the backbone of the local economy.

The public declaration, which a company spokesperson confirmed was a mix of VAT, social security contributions, withholding taxes, and other levies, seems carefully timed. Senegal’s National Assembly is currently debating a plan by President Bassirou Diomaye Faye’s government to impose a 0.5% tax on mobile money transfers and a 1.5% tax on merchant payments.

For the new government, the logic is painfully simple. Inheriting a budget deficit of 12.3% and public debt kissing 100% of GDP, it needs money, and it needs it now. The booming mobile money sector, which processed a staggering 48 trillion CFA francs ($79B) in 2024, looks like an irresistible target. The government hopes its new tax will pour around 230 billion CFA francs ($377M) into state coffers over the next three years.

Wave’s carefully worded statement appears designed to tell a different story: that it is already a significant contributor to the Senegalese economy. “These amounts are verifiable, declared, and audited,” the company stated, highlighting its commitment to “support government action through investments in Treasury bonds.”

A “Winning Alternative” or a Clever Dodge?

Over all, the fintech industry in the country isn’t taking the threat lying down. The Senegalese Association of Payment Institutions (ASEPAME), a lobby group whose members include Wave and its main rival, Orange Finances Mobiles, last week fired back with a detailed counter-proposal. Their message: taxing users is a catastrophically bad idea, and they have a better one.

Leaning on woeful tales from the continent, ASEPAME points to Tanzania, where a similar tax caused a 38% drop in transactions, and Uganda, where a 1% levy led to a jaw-dropping 60% collapse in volumes, forcing a government U-turn. The association argues that taxing transaction volumes will simply push people back to cash, shrinking the very digital economy the government wants to tax.

Instead, ASEPAME has presented what it calls a “winning alternative.” It suggests the government levy a 2.5% tax on operators’ revenues between 2026 and 2028. According to their own, rather convenient, calculations, this approach would not only be less damaging to financial inclusion but also far more lucrative for the state. They project their plan would generate a whopping 530 billion CFA francs ($870M) over three years — more than double the government’s target.

The math, as presented by the industry, is compelling. By taxing revenues, they argue, the sector continues to grow, generating 489 billion CFA francs in existing taxes (like corporate and payroll) plus another 43 billion CFA francs from the new levy. The government’s plan, they warn, would shrink the market so much that it would yield only 272 billion CFA francs in a realistic scenario — a 50% drop in volume. It’s a bold pitch: “Let us grow, and we’ll all make more money.”

The debate goes beyond spreadsheets. In a country where over 90% of adults have a mobile money wallet versus just 26% with a traditional bank account, the proposed tax is seen as a tax on daily life.

For fintechs like Wave, they must persuade a cash-strapped government not to kill its golden goose. The question now before Senegal’s authorities is whether to opt for a quick, but potentially destructive, tax hit or to play a longer game with a sector that has become a strategic national asset.