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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Bridging Nations

On 21st March 2018, 44 African heads of state signed the African Continental Free Trade Agreement (AfCFTA), which seeks to remove tariffs on 90 percent of continental trade. For many years, experts have recognised that increasing intra-African trade is key to economic development; however, this has been hindered, not only by tariffs, but also by Africa’s infrastructure deficit. Nevertheless, there are recent encouraging signs of improvement, particularly in the south and east, which should complement AfCFTA.

Infrastructure Deficit

In March 2018, the Export-Import Bank of India claimed in a study that inadequate transport infrastructure adds 30 to 40 percent to the cost of goods traded among African countries. In May 2017, the African Development Bank (AfDB) claimed in a report that, although intra-African trade has increased, transport and communication infrastructure is less developed between countries on the continent than it is between Africa and the rest of the world. Given this situation, it is unsurprising that intra-African trade continues to struggle.

However, there are signs of change. In Southern and Eastern Africa there are many transport infrastructure projects in development, seeking to build economic (as well as literal) bridges between nations and open the interior to international trade.

Port Expansion

International trade in Southern and Eastern Africa has been through a small number of ports, many of them in need of development. In the past year, improvements have started to be made. In July 2017, the World Bank approved a $345 million loan for the expansion of the Port of Dar es Salaam in Tanzania and in October 2017, it was announced that the Japanese government would provide a loan worth close to $350 million for the second phase of expansion at the Port of Mombasa in Kenya. Even Africa’s largest and most developed port – the Port of Durban in South Africa – commenced an upgrade and expansion project in 2017.

There has also been a growing number of rehabilitation projects at undeveloped ports along the eastern seaboard. Nacala in northern Mozambique, the mega-port at Bagamoyo in Tanzania and Berbera in Somaliland are three examples of such projects. These projects are vital to landlocked countries, which are often over-reliant on a specific transport route for exports. For example, nearly 95 percent of Ethiopia’s foreign trade is through the Port of Djibouti; a dependency that should be alleviated by rehabilitation of the Port of Berbera.

Opening the Interior

It is recognised that developments on the coast must be matched by infrastructure projects inland. The development of the Port of Nacala is part of a wider Nacala Corridor project, which includes a railway line to link north western Mozambique and Malawi to the coast. There are plans for this line to be extended into Zambia. Similarly, the expansion of the Port of Mombasa was preceded by the development of a new railway between Mombasa and Nairobi. This railway is part of an ambitious East African Railway Network, which will link Kenya, Uganda, Rwanda, Burundi and Tanzania. The second phase is currently under construction and the line should reach Uganda’s border by 2021.

Rail and Road Regeneration

In recent years, there has been investment in railway infrastructure across Southern and Eastern Africa which not only links the interior to ports but also facilitates intra-African trade. Projects in the region include: Addis Ababa-Djibouti Railway between Ethiopia and Djibouti; Tazara Railway between Zambia and Tanzania; Lobito-Luau Railway between Angola and the Democratic Republic of the Congo (DRC); and Trans-Kalahari Railway between Namibia and Botswana. While such projects have progressed at different paces, governments in the region have at least acknowledged the importance of modernising railway infrastructure: an important step to increasing intra-African trade.

There has also been increased investment in road infrastructure. The LAPSSET Corridor project in Kenya seeks to strengthen transport links between Kenya, Ethiopia and South Sudan. Although this project’s progress has been sluggish, new highways have greatly reduced travel time between Nairobi and the Ethiopian border, suggesting strong potential for the rest of the project. Another example of reducing travel time through improved road infrastructure is the Kazungula Bridge, which is set to be completed by March 2019. The road and rail bridge will link Zambia and Botswana and create a one-stop border post between the two countries. It is estimated that this will reduce the time crossing the border from 30 hours to 6 hours. This will greatly improve transport along the North-South Corridor from the Port of Durban to the Copperbelt in the DRC and Zambia. Zimbabwe also joined the Kazungula Bridge project in March 2018. Although there are concerns that it could divert business away from Zimbabwe, the country’s road network will be linked to the project and it may encourage the government to upgrade its current road infrastructure to remain competitive.

Foundation for the Future

While many of the transport infrastructure projects in Southern and Eastern Africa have been slow-moving and have suffered from bureaucratic inefficiency, and in some instances corruption, improvements are evidently being made. This will not only open the interior to a growing number of international ports, but also increase intra-African trade. While established sectors such as mining will be the primary beneficiaries in the short-term, it should also contribute to the development of a range of sectors in the medium to long-term. Such development will be aided by the AfCFTA, which, although still to be ratified by each country’s government and lacking the support of important economies like Nigeria, will further reduce barriers to intra-African trade. The combination of the AfCFTA and improvements to transport infrastructure in Southern and Eastern Africa is providing a strong foundation for local economies.  This will doubtless present a range of investment opportunities in the coming years.

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

Elections in 2016

There are a number of important elections across Africa scheduled for 2016 and over the next year, Africa Integrity Insights will examine a selection of these. As an introduction to the upcoming publications we have compiled a list of countries where elections are set to take place in 2016, including the scheduled date (when available) and the type of election.

  • Benin: Presidential (28th February)
  • Burkina Faso: Municipal (31st January)
  • Cape Verde: Parliamentary and Presidential (February & August)
  • Central African Republic: Parliamentary and Presidential Run-off (31st January)
  • Chad: Presidential (April)
  • Côte d’Ivoire: Parliamentary (December)
  • Comoros: Presidential (21st February)
  • Congo-Brazzaville: Presidential (20th March)
  • Democratic Republic of Congo: Legislative and Presidential (27th November)
  • Djibouti: Presidential (April)
  • Equatorial Guinea: Presidential (November)
  • Gabon: Parliamentary and Presidential (December)
  • Gambia: Presidential (1st December)
  • Ghana: Parliamentary and Presidential (7th November)
  • Niger: Parliamentary & Presidential and Local (21st February & 9th May)
  • Rwanda: Local Government (8th, 22nd & 27th February and 22nd March)
  • Sao Tome and Principe: Presidential (July)
  • Senegal: Constitutional Referendum (May)
  • South Africa: Municipal (May-August)
  • Sudan: Darfur Referendum (11th April)
  • Tanzania: Zanzibar Re-run (20th March)
  • Tunisia: Municipal and Regional (30th October)
  • Uganda: General (18th February)
  • Zambia: Legislative and Presidential (11th August)

Dispatches From Africa

Change They Can’t Believe In

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Julian Fisher writes from Dar es Salaam:

As I write, it appears that Tanzania’s Chama Cha Mapinduzi (CCM – Party of the Revolution) is about to demonstrate once again a truth that Africa’s post-independence ruling parties seem to grasp instinctively and opposition parties forget too readily: that it’s older and rural voters that win elections, not excitable, noisy, urban youths.

It remains too early (as of the morning of 28th October) to call the election decisively, but the direction of travel is clear. With 113 of 264 constituencies declared, CCM candidate John Pombe Magufuli has opened up a lead in the hundreds of thousands and CCM maintains a comfortable majority of Bunge seats. The more optimistic CCM campaigners, claiming to have seen all constituency returns – verified and unverified – are suggesting a final tally for their man of 65%, which would be an improvement on CCM ‘s position in 2010. Instinct tells me this is overly optimistic and that the final outcome will have Magufuli enjoying support in the mid-50s. Even so, opposition strategists are conceding privately that the gap is now unbridgeable for their candidate, former prime minister Edward Lowassa. Inevitably, this dawning awareness has been accompanied by claims of electoral manipulation, most particularly on the islands of Zanzibar (on which matter I will write separately). So far, so predictable.

In truth, the fashionable international media narrative about this election representing a genuine threat to CCM’s hegemony was never very convincing. Mainly because of the characters of the two leading candidates.

The CCM surprised almost every observer when it elected the little known Magufuli as its presidential candidate. But the party has form in choosing unexpected candidates and this one was particularly smart. While previously low profile, Magufuli is respected by many ordinary Tanzanians as hard-working and untainted by corruption. His campaign slogan of ‘hapa kazi tu’ (roughly translated as ‘here, just work’) played well to his reputational strength. As a result of his election, long-serving CCM member and the party’s prime minister until 2008, Lowassa, defected to the opposition Chama Cha Democrasia na Maendeleo (CHADEMA – Party of Democracy and Development). He was almost immediately anointed as Chadema’s presidential candidate – a surprising move for a party that wears democracy on its sleeve, and one which led to the resignations of senior party figures, including the man who had expected to win the nomination, former candidate Wilbrod Slaa. Not a promising start.

Furthermore, Lowassa’s resignation as prime minister in 2008 came amid corruption allegations relating to energy contracts. While he has not been convicted of any wrong-doing, Lowassa has never quite managed to shake off the negative connotations of the so-called Richmond affair. Given that a commitment to anti-corruption was previously Chadema’s strongest opposition suit, Lowassa was a puzzling choice of candidate and one that I believe it will come heartily to regret. Having kicked the campaigning ladder from beneath itself, Chadema and its partners in the UKAWA coalition (Umoja ya Katiba ya Wananchi -Union for a People’s Constitution) were forced to rely on their man’s star-quality and, in particular, his somewhat surprising youth appeal (Lowassa is 62). It seems likely to prove too narrow a strategy.

True, Edward Lowassa can pack out a stadium, command media attention and elicit yelps of appreciation from youths desperate for change and economic opportunity. But the popular slogan for change ‘Miaka 54 inatosha’ (’54 years – of CCM – is enough’) lacked broader resonance since Lowassa had been part of CCM for 38 of those years. And, while Lowassa was whipping up the crowds, Magufuli was quietly living up to his reputation, by working hard. He travelled the country extensively, largely by road in the early stages of the campaign, visiting village after village and engaging with voters one-to-one, displaying a humility that talks to the hard-working, predominantly peaceful and quietly optimistic people of rural Tanzania.

It is a strategy that looks set to have paid dividends for CCM and Magufuli and, I dare say, for the country as a whole. Magufuli looks like he will grow into a solid, positive force for change in Tanzania: ironic, as the opposition sought to portray him as the status quo, establishment candidate. Wiser heads saw through this and may well have prevailed. The younger, impatient heads will get another chance in 2020, but many of them will have grown up by then.

Tanzania Succession: Alcohol Unites CCM

Women Outdoor

On 12th July 2015, Chama Cha Mapinduzi (CCM) announced that its candidate for Tanzania’s presidential election will be the Minister of Works John Pombe (alcohol in KiSwahili) Magufuli. This decision surprised many observers as Magufuli beat a number of CCM heavyweights to the party’s nomination. Nonetheless, it appears that his selection has been largely welcomed by not only the party but also the wider country.

The initial list of candidates for the CCM nomination was 38 names long and the two who were considered the frontrunners were former Prime Minister Edward Lowassa (2005-2008) and the current Minister of Foreign Affairs Bernard Membe. These two were joined by a number of other possible contenders including: Vice President Mohamed Bilal; Prime Minister Mizengo Pinda; Deputy Minister of Communication, Science and Technology January Makamba; and Makongoro Nyerere, son of Tanzania’s founding president Julius Nyerere. Interestingly, Magufuli was not considered a contender until the list was whittled down by the party’s Central Committee to only five names on 10th July 2015. Nevertheless, even within these five names, which were reduced to three by the party’s National Executive Committee on 11th July 2015, Magufuli was up against Membe and Makamba. When the final three – Magufuli, Minister of Justice and Constitutional Affairs Asha-Rose Migiro and African Union Ambassador to Washington Amina Salum Ali – were eventually put to the CCM’s National Congress, Magufuli won an overwhelming victory with 87 percent of the vote.

In the process of creating the candidate shortlist it appeared that the CCM might have been heading towards a divisive period in its relatively stable history. The campaign had already created tension between the Lowassa and Membe camps and after the announcement of the first shortlist, the Lowassa camp reacted strongly. Supporters of Lowassa were highly critical of the Central Committee’s and particularly the current president’s – Jakaya Kikwete’s – decision to not include Lowassa in the shortlist. This is primarily because Lowassa supported Kikwete’s bid for the presidency in 2005. His supporters claimed that this move would damage the party as Lowassa was the most popular candidate. One of Lowassa’s supporters in the Central Committee, Emmanuel Nchimbi, was reported as stating that “we disassociate ourselves from this decision”. There were also rumours that Lowassa’s supporters were keen for him to break with the CCM and run against the party’s candidate in October. Nonetheless, although Lowassa is an influential member of the CCM and has a solid support base, he is a divisive figure within the party and has a questionable reputation. In 2008, Lowassa was forced to resign as prime minister after a select committee accused his office of foul play in relation to a contract involving the state-owned electricity company TANESCO and Richmond Development Company. Since then, Lowassa’s name has been tarnished by corruption allegations, a fact that he was acutely aware of when he launched his campaign stating that “we cannot build a modern economy without curbing corruption”.

After the removal of Lowassa from the race, Membe should have been the frontrunner. However, his nomination would have increased the likelihood of internal divisions with Lowassa’s supporters, which would have been taken advantage of by the opposition. Thus, it appears that the CCM needed a unity candidate and they found this in Magufuli. This was reflected in his definitive victory at the party’s National Congress and further supported by the minimal amount of spoiled ballots. Unlike Membe or Lowassa, Magufuli did not lead or belong to a camp within the CCM, which meant that his nomination would not deepen or create divisions in the party. Instead, he is able to garner widespread support, even from his rivals, as shown by Migiro and Ali’s pledge of support for him following his victory. Thus, his selection helps to ensure the unity of the CCM and in turn its continued domination of Tanzanian politics.

Furthermore, the selection of Magufuli is a sign from the CCM that it wishes to change its image. If Lowassa was chosen to be the party’s candidate, its message of fighting corruption would have been perceived as mere lip service, both nationally and amongst the international community. As corruption remains a major problem in Tanzania, with it ranked as the 56th most corrupt nation in the world on Transparency International’s Corruption Perception Index 2014, it was important that the party’s candidate was perceived as serious about fighting corruption. Unlike Lowassa, Magufuli has not been tainted by corruption allegations. Rather, he has been packaged as a man of action, who will deal with the problem head on. Kikwete reportedly described him as “a no nonsense man” and said that “we hope he will help the country to conquer poverty, fight graft and indiscipline”. The CCM National Chairman also described him as “a very aggressive candidate”, alluding to his position concerning corruption. Moreover, Magufuli has similarly spoke on the matter stating that “to all irresponsible leaders, thieves and corrupt officials; please be informed that I will deal with you in a very polite way”. It seems that Magufuli’s image has struck a chord with the wider population, who see him as the type of tough and committed leader that Tanzania needs. Although he is far from a break with the past – Magufuli has been a member of the CCM since 1977, a CCM MP since 1995 and a cabinet Minister since 2000 – he is a sign of the CCM’s changing image. This was also demonstrated by two of the final three candidates being female and Magufuli’s decision to select the CCM’s first female running mate, Samia Suluhu Hassan.

Although the CCM are almost guaranteed a victory in October’s election whoever they chose to represent them, it seems that Magufuli is likely to ensure this and possibly even increase the party’s majority. Despite a number of opposition parties’ commitment to fielding a joint candidate, it is highly unlikely that they will be able to challenge the CCM, especially under the leadership of Magufuli. He appears to have popular support and after winning his party’s nomination, the presidency is almost within reach. The question is whether he will represent a change for the CCM once he is power, particularly in relation to the fight against corruption. Magufuli has asked the Tanzanian people to “Trust me” and said that “I am not going to let you down…trust me I will not fail you”. The Tanzanian people will chose whether they trust him on 25th October 2015, and later see if that trust is well placed.