Taxing Questions

In 2018, there has been a growing trend of African government’s trying to tax, and in some instances restrict, the internet usage of their citizens. While governments see this as a way of strengthening their positions by raising much-needed funds, protecting state-owned telecom companies and reducing online criticism, it appears they have overlooked the long-term effects of such policies and their potential for provoking unrest.  

It has long been recognised that East Africa has led the way with respect to internet and mobile money innovations on the continent; as illustrated by the growth of platforms such as M-Pesa. It is therefore unsurprising that governments in East Africa have similarly been at the forefront of taxing and restricting internet usage and mobile money transactions. As user-bases have rapidly grown and opposition groups have increasingly used online forums, governments have simultaneously looked at the potential tax revenue provided by such users and the ability to which they can restrict opposition activities online. In the past year, the governments of Kenya, Tanzania and Uganda have imposed taxes on internet and mobile money usage. In Kenya and Uganda, the focus has been on mobile money payments and data usage, particularly in relation to social media, while in Tanzania the government imposed a so-called ‘blogger tax’, which required online bloggers to purchase a license that costs the equivalent of the country’s average annual income.

Although it can be argued that taxes on internet and mobile money usage help to broaden the narrow tax base that exists in most African countries, such taxes tend to be regressive. While Ugandan President Yoweri Museveni considers mobile money and social media platforms as “luxury items”, he overlooks their broad user-bases and the increasingly important role they play in Uganda’s economy and society. In Kenya in particular, where over 93 percent of the population have mobile money accounts, taxes on mobile money transactions are likely to affect disproportionately the poorer in society, who do not have bank accounts and have become reliant on such platforms.

The imposition of taxes on internet usage and mobile money is not limited to East Africa and it seems that governments across the continent are increasingly examining the viability of such taxes. Since August 2018, the governments of Benin, Zambia and Zimbabwe have announced similar taxes on internet usage and mobile money. In Zimbabwe, this has had a had a damaging effect on the economy, where mobile money was one of the very few economic successes of recent years.

In Benin, the tax was so unpopular that the #TaxePasMesMo [Don’t Tax My Megabytes] protest movement managed to force the government to overturn its decision within less than a month. Similar protests have been seen elsewhere, not least Uganda, where Museveni was forced to halve the levy on mobile money following protests. It is likely that such protests will continue and intensify as people increasingly feel the everyday cost of such taxes.

Much has been written about the role of the internet in protest movements and, at least in the African context, commentators have tended to exaggerate its influence. That said, although it has not been particularly effective at strengthening the organisation of opposition groups, the restriction of access to internet and mobile money platforms is likely to become an important catalyst for protests and social unrest across the continent. The direct implications of such taxes can be easily exploited by opposition groups and, due to broad user-bases, it is possible that protest movements that coalesce around such issues could cut across traditional political divisions. Accordingly, African governments should think twice before following Kenya, Uganda and Tanzania’s examples.

This article originally featured in Africa Integrity’s October 2018 Newsletter. To join our newsletter mailing list, please contact us.

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Uganda Election 2016

MC3_8518 - Uganda- KampalaAfrica Integrity have complied a report on Uganda’s upcoming election and its likely aftermath.

This year’s election seems to be the closest fought contest in recent history and political tensions are running high. Moreover, it appears that both the government and the opposition expect, and are seemingly preparing for, widespread instability following the election.

To a request a copy of this report please contact us.

Political Risk Rising in Uganda

MC3_8518 - Uganda- Kampala

Although the current political situation in Uganda has received scant attention from western media, observers in the country are beginning to speculate that President Yoweri Museveni’s 28 year rule is approaching its end, as he is forced to face a new type of opposition movement that unites civilian and military elements against a backdrop of factionalism within his own party.

General David Sejusa, former coordinator of Intelligence (2005-2013) and senior presidential advisor, who has been living in exile in the UK since April 2013, has openly opposed Museveni and called for his removal by any means necessary. Africa Integrity has been told by reliable sources that Sejusa loyalists in Uganda are attempting to organise a rebel insurgency. The group is said to include some disaffected soldiers from the Uganda People’s Defence Forces (UPDF).

Alongside the emerging military opposition, the civilian political opposition is displaying a new-found unity and converging with armed would-be insurgents. Sources close to Sejusa suggest that he played a key role in unifying the previously fragmented political opposition, which is increasingly showing support for the removal of Museveni ‘by all means necessary’. This is demonstrated by influential opposition politicians like Colonel Kizza Besigye, the former leader of the FDC, publicly declaring that he is working closely with Sejusa to overthrow the Museveni regime before the 2016 presidential elections.

This growing opposition movement is also underpinned by factionalism within Museveni’s National Resistance Movement party (NRM). Prominent ministers including the former prime minister and secretary general of the NRM, Amama Mbabazi, and former vice president, Gilbert Bukenya, have publicly broken ranks with the president, giving rise to two opposing factions within the party – one in support of Museveni and the other in support of Mbabazi. It is highly likely that this growing split was behind Museveni’s decision to sack Mbabazi as prime minister on 19th September 2014. Furthermore, sources suggest that there is an increasing amount of collusion between senior government figures and the anti-Museveni revolt inspired by Sejusa. On 21st September 2014, Sejusa encouraged Mbabazi to join the struggle aimed at “ending the dictatorship…which we both created”.

This new revolt could potentially be the greatest threat to Museveni’s political dominance yet. An insurgency growing from within his own security structures and converging with a united civilian political opposition is a dangerous new phenomenon for Museveni to face. This delicate situation is compounded by Museveni’s growing weakness within his own party. Nevertheless, it would be premature to accept unquestioningly Sejusa’s assessment that Museveni’s rule will imminently come to an end. Museveni is not to be underestimated in his ability to hold on to power, as demonstrated over nearly three decades at the helm, and his Special Forces Command (led by his son Brigadier Muhoozi) is a powerful military body which will support him in this struggle.

As a result, it is highly likely that Uganda will experience a period of rising political instability and unrest over the coming years as the opposition put forward their challenge to Museveni and he acts to defend his position.

 

 [This post is an abbreviated version of a longer report produced by Africa Integrity for circulation to clients. Readers who would like to receive a copy of the full report should contact us with such a request]