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How digital taxes are hurting connectivity rates across Africa.

Several countries in Africa have recently introduced taxes on fundamental parts of the internet. Often considered a means of generating revenue streams during economic hardships, the taxes have ultimately limited connectivity and, with it, infringed upon important digital rights.

Most famously, in July 2018 Uganda introduced a tax on the use of social media platforms. However, Zambia, Kenya and Benin have also introduced similarly regressive pieces of legislation in the past year.

According to the Alliance for Affordable Internet, more than 75% of Africa’s population is still offline. Without addressing the impact of these new taxes, there are risks that internet penetration rates will continue to stagnate, leading to dramatic economic, political and social consequences.

The taxes

In Uganda, the excise duty took effect on 1 July 2018 and imposed a daily fee of UGX 200 ($0.05) on users accessing “over the top services” which included social media platforms. The legislation also introduced a tax on mobile money transactions, valued at 1% of the transaction.

In Kenya, the 2018 Finance Bill introduced new taxes on mobile and internet data services. The proposals increased the excise duty on telephone services, as well as implementing a 15% tax increase on internet data services. Despite originally being blocked, the changes were implemented in October last year.

In Tanzania, the government introduced a $930 license fee for operating a blog as part of their Electronic and Postal Communications Regulations. The move also allowed authorities to revoke a permit if the owner was found to be publishing content that “causes annoyance, threatens harm or evil, [or] encourages or incites crimes” among other vague clauses. If content is not removed, the owner could face a fine of no less than five million shillings ($2,210) or a year in prison.

Finally, in Benin a social media tax was briefly introduced last year which caused a 250% increase in the price of 1GB of mobile data. However, after significant challenges, the government decided to repeal the taxes.

The economic impact

How digital taxes are hurting connectivity rates across Africa. 1
Marrakech. Djemaa el Fna.

Across the continent, the average citizen pays 8% of their monthly salary for 1GB of mobile data, in comparison with just 1.5% in Asia. Unsurprisingly, the introduction of additional taxes on internet use has dramatically limited the rise of connectivity.

In Uganda, the impact has been particularly stark. According to Juliet Nanfuka, the Research and Communications Officer at CIPESA: “the social media taxes resulted in at least five million Ugandan internet users going offline.” Primarily, this was due to the economic burden that the new taxes introduced.

“At first, when they introduced the tax, I was offline for over a week because I didn’t have money on mobile money to pay for the tax,” said a woman working in the informal sector, as reported by A4AI.