In Uganda between March and September 2018 the number of Internet users fell by almost 30%, from 19.3 million to 13.5, as reflected an investigation of Reserch ICT Solutions (RIS). This evolution is disconcerting because, in general, the number of Internet users is growing in all corners of the world. Although the surprise dissipates if one takes into account that the period includes the first three months of a controversial rate for the use of social networks and other digital services. As of July 1, 2018, it cost Ugandans 200 shillings a day (the equivalent of just under five euro cents) to connect to Facebook, use Twitter, send WhatsApp, make a Skype call or search for appointments on Tinder. . The effects of those 200 shillings a day have been significant on the social life, business activity of the country and even on its path to economic growth, not counting the impact on access to information. The Ugandan government reproduced a trend that occurred in other African countries such as Chad, Benin, Zambia or Tanzania.
The Ugandans resisted, took to the streets, demonstrated and even clashes occurred on behalf of what was known as the “social media fee” that levied the use of almost sixty services of the qualified OTT (over-the-top), from social media, to platforms streaming going through instant messaging applications. The firmness of the positions of both showed that what was at stake was more than a fee. The president himself, Yoweri Museveni, was in charge of setting the government’s position: “The use of social media is definitely a luxury item. Using the Internet to access social media to chat, entertain yourself, fuel malicious behavior, provoke subversion, or incite murder is definitely a luxury. ” For the political and social opposition it was an abuse of fundamental rights, a strategy of the president to muzzle access to information and with it the ability of citizens to respond to their undemocratic drifts. Therefore, the most popular leader of the opposition, Bobi Wine, led the marches against the tax.
Now, with a two-year perspective and the rumor of a rate reform, Pollicy, a Ugandan organization that works on civic technologies, data for the common good and the improvement of governance through innovation, has wanted to shed a little more light on the impact of the measure with an investigation that they have titled A shot in the dark. “The report It is the continuation of a previous study that we carried out six months after the entry into force of the tax. We wanted to examine how the tax continues to affect social, economic and cultural aspects of everyday life in Uganda, ”explains Neema Iyer, the director of Pollicy. The technologist recalls that the irruption of the pandemic has put many things on hold, but that “at the beginning of 2020, the Ugandan tax agency (URA) proposed a policy change to directly tax the use of the Internet, instead of the tax on social networks, basically because the current system did not generate the expected collections ”.
The authorities used, basically, two arguments to support their measure. The first was to stop the socially harmful uses of social media, which the Museveni considered the lugambo, which in the Lugwere language refers to gossip. The second of the arguments was purely tax collection, the tax would serve to improve telecommunications infrastructures in rural and remote areas. “The budget data show that the revenue projections were not met,” says Iyer, dismantling one of the pillars of the rate.
The Pollicy report reflects that the authorities barely collected 15% of what was expected in 2019 with the tax, 46.3 billion Ugandan shillings (just over 11 million euros) of the 322,000 million (almost 77 million euros) they expected. And the estimate for 2020 is not much better. Regarding the second argument, Iyer comments: “We could measure the gossip that is spread in Uganda, but the reality is that disinformation proliferates all over the world.” So from your experience and report data, the director of Pollicy advances a conclusion: “The tax mainly affects people who were already economically disadvantaged and widens the digital divide even more”.
Some young people had changed their consumption habits and had sacrificed food, drinks or convenient means of transport to pay the social media fee
To carry out the study, the organization has approached Internet users from different areas of the country with the aim of determining the impact on their daily lives and on economic activity. The realization from the first study Six months after the entry into force of the rate, it also allows an analysis with a certain perspective and shows curious behaviors. For example, the fact that Ugandans initially looked for a way to avoid the tax and incorporated elements into their daily lives that for most Internet users are exceptional. In that first investigation it was revealed that “only” 56% of users were paying the fee and, among those who did not, 38% regularly used VPN, a system that allows hiding or falsifying the place from the one where the connection is occurring.
The use of VPN has been in some cases a form of response to the rate and in others, simply, a necessity. But above all it has been an immediate reaction. The current report “has found that respondents are increasingly paying the tax,” says Iyer. “This is probably due,” he continues, “to the fact that users saw that VPNs consumed large amounts of data and phone battery. Which has led to pay the fee again instead of using VPNs ”. For this system to be a durable solution, “improved VPN applications that consume less data and battery would be needed,” concludes the technologist.
Other investigations revealed that some young people had changed their consumption habits and had sacrificed food, drinks or convenient means of transportation in order to pay the social media fee. “We would love to be connected at all times, but it has an added cost and it is high, so we connect on time because we fear that if not the cost will increase, I think that the 2000 shillings that I had reserved to buy data, I will pay for the fee. I decide to save it and use it for other things and when I have something urgent to do online then I connect “, explained one of the participants in Pollicy’s study.
In this way, one of the first consequences of this measure has been to increase the digital divide, for the most popular classes it can mark the limit between having or not having access to the Internet. For Ugandans who are below average annual income, the tax increases their Internet effort by 10%, while for those who charge the most, it is barely 1%. To understand this effort, since the entry into force of the tax on social networks, a 1GB data package forces the group of Ugandans with the lowest income to dedicate 40% of what they charge in a month, as explained from CIPESA, a Ugandan organization for the defense of digital rights.
One of the respondents expressed it in the simplest way: “I look at the situation of my mother in the town and it is evident that this rate is not fair or equitable. At the end of the day, if I have paid the rate to have access For the whole month, I pay 6000 shillings; a deputy, in his position, also pays 6000 shillings; but even my grandmother in the village also pays 6000 shillings. However, the standard of living is not the same. ” Another participant reflected a direct consequence: “Sometimes I cannot contact my mother in the village because she cannot afford the Internet. And that’s very frustrating. “
The impact on women is of particular concern to the Pollicy directors: “They tend to earn less than men in Uganda, due to structural inequalities, which are accentuated by patriarchal practices. The cost of the Internet is already high relative to Ugandan wages and this rate exacerbates it. Therefore, women are more negatively affected. There are many other challenges related to digital inclusion such as digital literacy, device ownership, or fear of violence online. The priority of governments should be digital inclusion, however, this tax on social media has a detrimental effect, also in this sense ”.
From the economic point of view, A shot in the dark It also reflects the testimonies of small entrepreneurs who use the digital environment in their incipient businesses and have been shaken by this rate. “For a business that is based on the connection, in which you have to communicate using social networks, sometimes the OTT rate expires without you being aware until what comment is in effect (because it is valid for 24 hours). it means that you may have received a message at a time when your rate is no longer in force without your realizing it and you miss it. And, therefore, you lose that business opportunity “, pointed out one of the respondents.
The rate, however, has had a domino effect that the authorities had not anticipated. Beyond the impact on Internet users; beyond the consequences in the daily lives of citizens; beyond, even the gap in the collection forecast for the tax. Fewer users are fewer customers for mobile network operators, fewer customers mean less business volume and less business volume means less taxes paid by these companies, as warns a RIS study.
Finally, Neema Iyer warns about how this measure can compromise the future of the country. “The tax can be prohibitive for young people and future entrepreneurs. It is urgent to determine whether it is worth giving up a dynamic innovation sector in exchange for the revenue raised by the social media levy. Considering that most countries strive to develop cutting-edge technologies and launch new businesses, taxes that disproportionately affect young people are likely to impact Uganda’s economic growth and competitiveness in the global environment in this field in the near future ”.
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