Millions of people in Uganda have abandoned social media after punishing taxes were imposed on the use of networking sites and on money transactions using mobile phones.
A daily levy, introduced in July to tame “idle talk” online and raise revenue, affects more than 60 online platforms including Facebook, WhatsApp and Twitter. To use such sites, Ugandans are expected to pay a tax of 200 Ugandan shillings (4p) a day.
In the three months following the introduction of the levy, the number of internet subscriptions to such services fell by more than 2.5 million, according to the Uganda Communications Commission. Fears have been raised over the impact on the economy.
At the time the tax was imposed, David Bahati, Uganda’s finance minister, said the legislation aimed to raise revenue for public services. However, the president, Yoweri Museveni, wrote to the finance ministry in March urging the introduction of the tax as a way to deal with the consequences of online “gossip”.
Critics have described the tax as an attempt to restrict free speech, and warned of the damaging impact on the economy. A lack of formal banking services in Uganda means many people rely on mobile phone companies to send money by text message.
It has made business very difficult. I can’t manage to pay employees and pay rent
Paul Cise, shop owner, Kampala
“The tax has not generated the revenue the government anticipated,” said Irene Ikomu, a lawyer based in the capital, Kampala. Technology and financial sectors have instead been hit, said Ikomu.
The number of people paying the tax for sites listed as “Over the Top ” (OTT) – chosen by the government because they offer voice and messaging services – fell by 1.2 million.
The value of mobile money transactions also fell by almost a quarter, to 14.8tn Ugandan shillings (£3.4bn) between June and September.
In the Naguru area of Kampala, Paul Cise, who sells data for Nov Mobile Limited, said he has been forced to cut staff because of the levy. “Customers are not happy about [the tax]. Many have resisted it,” he said. “It has made business very difficult. I can’t manage to pay employees and pay rent.”
Florence Acen, a mobile money agent in Kyaliwajjala, in Uganda’s Wakiso district, said she had lost business since the tax was introduced. The levy eats up the commission she previously earned from the lowest paying customers, she said, forcing her to turn such clients away. “It makes us too busy for nothing,” she said. “We tell them that OTT network is off. I can’t waste my time.”
The plummeting number of internet subscribers has boosted calls for the tax to be scrapped, though Ibrahim Bbosa, spokesperson of the Uganda Communications Commission, expects usage to recover. The drop in data use was due to customers adjusting their behaviour, he said.
“If I can access internet at work, I would rather access it at work and probably not access it when I am off work premises,” he said. “Probably, sooner or later, people will realise this is something [they] can live with. The pattern will return to normal.”
Human rights experts say that while the statistics on internet use are concerning, the true impact of the tax on civic engagement and freedom of speech remains to be seen.
“Social media has become the major source of news and political information,” said Ikomu. “Heightened exposure to information via the internet has led to Ugandan citizens being more critical about political conditions in the country.”