Online tax hurts the poor
Shutting down mobile and internet services is costing several African countries millions of dollars
Awave of online censorship is affecting more than public discourse. It’s costing some Africans at least 10% of their incomes and seeing economies bleed millions of dollars.
Uganda levied a tax on social media use on July 1. Ugandans must now pay 200 Ugandan shillings ($0.05) every day before they can use social media sites such as WhatsApp, Twitter and Facebook.
Although the move is touted as an effort to increase tax revenue, President Yoweri Museveni reportedly originally intended that the tax would help to curb online “lugambo” or gossip.
“African governments have realised that they cannot openly censor free speech online without criticism from the global community,” said Kuda Hove, the legal and information communication technology policy officer of the Media Institute of Southern Africa-Zimbabwe. So some are taking steps to “restrict access to over-the-top services and social media platforms, which is a form of censorship”.
For one out of four Ugandans (the lowest-earning quartile of the population), the new tax has increased the cost to connect by 10%, according to data compiled by the Alliance for Affordable Internet. It will cost this group almost 40% of their monthly income to buy one gigabyte of data.
“The economic and social impact of social media tax is real,” said Gilbert Sendugwa, the executive director of the Africa Freedom of Information Centre, based in Kampala. “People who have been using social media as a source of information for economic opportunities or those that have been using it to market their products have been affected.”
The poor have in effect been muzzled.
For the wealthiest quartile of the population, the cost to connect has increased by 1%, one-tenth of the increase that the poor have to endure.
“By and large, this new excise duty disproportionately and negatively impacts low-income Ugandans and their ability to affordably access the internet,” the alliance said in a statement.
Sendugwa said: “Indeed, it’s very common for people, especially those living in the village, to say that they are on social media once a week as opposed to before the tax, when they would be having access more regularly.”
Twitter user Rogers Mugarura put it this way: “How many ordinary folks in villages can sacrifice a kilo of maize flour for paying to access Facebook?”
The tax was introduced at the same time as a 1% tariff was implemented on the sending and receiving of mobile money.
Revenue from this form of transaction has already taken a knock as people have reverted to cheaper ways.
“A colleague of mine recently told me that he has resorted to sending money to pay workers at his village farm by matatu [taxi] because it is cheaper than sending [it] by mobile money,” said Sendugwa.
Halfway through July, the government reduced the mobile money tax from 1% to 0.5%, adding that it will be levied only on withdrawals and not on “sending, receiving and depositing” money, as previously indicated.
But the damage to the economy has already been felt — the Uganda Central Bank reported that the total value of mobile cash transactions had declined by 672-billion shillings ($182-million) in the first two weeks after the rolling out of the new laws.
Inflation also rose by one percentage point in the four weeks after the implementation of the law, according to the bank.
But Uganda is not the only country taxing media users. Tanzania has introduced a $930 licence fee for bloggers, online radio stations, online streaming platforms and forums to publish content. It also has many other requirements, including “a requirement for bloggers and any other internet-based service to share the names of their shareholders, their approximate cost of investment, tax clearance certifications and pay … an initial application fee, a licence fee and renewable licence fee after three years and a lot more”, said Wathagi Ndungu, the Google policy fellow at the digital rights advocacy group Paradigm Initiative.
“This new law denies new people space for innovation,” one Tanzanian blogger in Dar es Salaam said. “How are we going to innovate through media if we are being stifled. On the economic front, it stifles the rights of the young people who have no resources but want to express themselves.”
According to Elsie Eyakuze, another blogger in Tanzania, “no voices except official government coverage, public sector accounts and sycophants or government trolls get left alone. Everyone who even questions or comments on this administration’s activities ends up attracting rude bills.”
Although she can afford the fees, Eyakuze has “iced” her own blog in solidarity with the start-up businesses and struggling artists who cannot. Not only is the rand hitting new lows because of emerging-market jitters, among other things, the country’s media mega-giant Naspers is also losing value. Its share price fell by 10% when its Chinese social media partner, Tencent, posted reduced earnings, losing about $150-billion in value, its first profit fall in at least a decade. The reason, say analysts, is that Tencent was ordered to shut down the latest Monster Hunter and Battlegrounds games. It seems the Chinese government believes it has insufficient control over gamers using offshore servers.
Schooling pays
Andries Greyling, chief executive of private school group Curro, said this week at the release of the company’s interim results that it will be investing R400-million to establish six new schools in new areas. This is expected to extend its reach in townships, and its campus in Protea Glen-Soweto is due to open later this year. Other areas where the company may open new schools include Vanderbijlpark, Edenvale, and Savannah City in Gauteng and Burgundy Estate near Cape Town. Curro offers lowerfee private schooling in Soweto, Soshanguve and Mamelodi. The company says the number of pupils has increased by 10% from 45 890 to 50691. Its latest interim results show that the company’s revenue grew by 18% to R1.2-billion, from R1.05billion last year.
Power outage
Power utility Eskom’s ongoing battle with trade unions hit another hurdle after the company announced on Wednesday that it has declared a dispute with the National Union of Mineworkers (NUM), the National Union of Metal Workers of South Africa (Numsa) and Solidarity. Although the three unions had in principle accepted Eskom’s latest wage offer, the utility said in a statement that the NUM and Numsa had introduced a “precondition” to the deal — that Eskom should not discipline employees who took part in a recent second round of unprotected strikes. The ongoing wage battle has hit Eskom’s operations, and the company continues to warn of possible loadshedding, although the actual number of rolling blackouts have been reduced. According to Eskom, the most recent industrial action violated a court interdict. Its group executive for human resources, Elsie Pule, said it was reserving its right “to follow the disciplinary process in line with the company’s disciplinary code and procedure”.