Just how crazy is Museveni’s ‘WhatsApp Tax’? Maybe not
President Yoweri Museveni’s proposal for a specific tax on “over-the-top” platforms (OTTs) - such as Facebook, WhatsApp, Skype, Viber, Twitter, and so on, has been met with ridicule and criticism. For now, setting aside the criticism, and accepting that these OTT services should pay their share of taxes, the question is “how?”
The Twitter and Instagram apps, among others, are outside the jurisdiction of the Uganda government, so the easiest way to tax them would have been if Twitter and Facebook had offices in Uganda. Because they don’t, the second easiest way would be to have these services sold as a required fixed bundled service with every SIM card. But that poses another problem, because a farmer in Mukono, might have no need for Facebook, so why should she pay for it with the SIm card?
The telcoms argue, rightly, that right now, these services are taxed because people use their mobile data – or Wi-Fi service - to access them, and the companies pay taxes on them to Uganda Revenue Authority based on minutes used.
So there’s no need to introduce a specific hard-to-manage tax. Furthermore, the President proposes that data and OTT use, which is educational, not recreational and dedicated to lugambo (gossip, and idle talk), not be taxed.
Which only complicates matters further. If I use my data to share a cartoon making fun of Museveni, his idea is that I should pay some kind of tax penalty on that. But if I immediately hand over my smartphone to my niece to research her science project, no tax should be paid on that bit of data! I will not dwell on how you can beat everything the President is proposing, and focus on the positives.
Technically, it is possible to segregate this type of use. If the Kampala government can do it, the technological leap it would have achieved would be so massive, it would place Uganda way up there with the South Koreas.
It would require a level of investment in science, digital infrastructure, reconstituting Uganda in the ultimate meritocracy, and catapult us into a new universe of enlightened government we have never even dreamt of before.
However, there are a few other ways Museveni might achieve his goal of raising even more money, easily. The simplest way is to make it easy for people to buy SIM cards, and to increase the number of Ugandans with access to mobile phones, which is becoming increasingly difficult under the “mad man” rules rolled out every other week by the Uganda Communications Commission.
According to the latest data from the National Information Technology Authority Uganda (NITA-U), 24.8 million Ugandans - 70.9 per cent of the population - own mobile phones. Also, just more than 13 million Ugandans, about 32 per cent of the population, have access to the Internet.
Imagine what would happen if mobile phone owners were 30 million. Assume that allowed MTN micro-loans and saving service Mokash to grow to 4 million active users; the impact it would have on the economy and the bottom line of the partner bank, which is easier to tax and collect, would be huge.
Also, without even having to gun for Kenya’s 90 per cent, Uganda should just aim to double the number of people with access to the Internet to 64 per cent.
Museveni would have more than the taxes he wants, and economic growth too, without placing an additional burden on anyone. But that would require opening up and reforming the telcom market in ways some of the very companies complaining about the “WhatsApp tax” have used their near-monopoly power to prevent.
It could also mean a lot of blood on the floor, and quite a few companies, like struggling Uganda Telecom, would have to be allowed to die.
Uganda could get there the India way, thanks to the country’s richest man Mukesh Ambani. For those who haven’t been following the story, Mukesh Ambani in mid 2016, launched a telecom venture called Jio and shortly after unleashed the JioPhone.
To get the low cost 4G LTE phone, you pay the equivalent of Shs82,000, which is refundable if you return the smartphone after three years. To qualify for the refund, you need to top up the phone for Shs82,000 a year, or a minimum of Shs2,700 a month.
And then, the killer. Jio offered very cheap data – and FREE VOICE CALLS FOR LIFE!
A stampede followed, with the network signing on average seven customers every single second of every single day.
With more than 100 million new smartphone users, very many people in the digital economy were making loads of new money, with some music streaming recording 300 per cent growth. And that is how you do it – by growing the pie. Mr President, call Mukesh Ambani.
Mr Onyango-Obbo is the publisher of Africa data visualiser Africapedia.com and explainer site Roguechiefs.com. Twitter@cobbo3
