August 21, 2020
The Solomon Islands Government, through their Economic Reform Unit, has approved tax refunds for payments using airtime for pension savings. This was announced by the Governor of the Solomon Islands Central Bank and the Ministry of Finance and Treasury today.
This waiver allows Solomon Islanders using airtime credit to deposit savings to not have to pay 10 percent tax over that purchase. This amount will retroactively be refunded into you Save members’ accounts.
The approval is a huge boost for youSave, the informal micropension product developed back in 2017 by the Solomon Islands National Provident Fund, with technical support from the United Nations Capital Development, made possible with funding from the Government of Australia. This unique micropensions account allows customers to save for both the long term as well as shorter term, allowing for withdrawals of partial savings annually.
In order to allow rural Solomon Islanders, living far away from financial service access points, the National Provident Fund, the Central Bank and the two mobile network operators in the country launched LoMobile. With LoMobile, youSave members can deposit savings directly into their account using airtime credit. This credit can be bought everywhere throughout Solomon Islands, , across the many islands that make up the country. While many people did embrace this new service, allowing deposits right from their phone instead of branches in town, the fact that tax had to be paid over this ‘payment’, as buying airtime is a payment, discouraged people.
Therefore, today’s announcement by the Solomon Islands Government is so significant; it showcases the Government’s commitment on providing regulatory frameworks and policies that allow for the development of products and services that prioritize the financial inclusion of Solomon Islanders. Especially now that the country is dealing with the socio-economic impact of COVID19. A financially challenging time, during which many youSave users were able to rely on money set aside on the short-term savings account.
And now, together with the tax waiver, the minimum amount for using LoMobile is reduced from SI$ 10 to SI$ 5, further encouraging members to save, even small amounts, if that’s what they can afford to set aside for the future.
loMobile is a service provided by the Solomon Islands National Provident Fund, as part of the youSave micropension savings scheme. The service is a culmination of a unique public-private partnership between the National Provident Fund, Solomon Telekom, Bmobile, the Central Bank of Solomon Islands and the Government of Solomon Islands. youSave and loMobile have been developed with technical assistance from the United National Capital Development Fund’s Pacific Financial Inclusion Programme, through funding provided by the Australian Government.