Taxing social media in Africa

taxing-social-media
Photo by George Pagan III on Unsplash.

How much would you pay your government for a day’s worth of WhatsApp messaging?

One after another, the governments of three countries in Africa, Uganda, Zambia and Benin have announced or imposed new taxes on mobile internet customers in 2018, leaving millions of Africans struggling to cover the costs of getting online. Only in Benin did protests result in quick abandonment of the tax plan.

Governments have imposed these levies to raise public revenues, and also argue that they are protecting the local telecommunications sector from competition from internet companies from abroad. But in practice, the (intended or unintended) consequence has been to push more people offline, increase barriers to getting online, and vastly limit freedom of expression and access to information — as well as access to goods and services that are now online.

Uganda imposed the first of these tax schemes in July 2018, forcing residents to pay a daily tax of 200 shillings ($0.053 USD) to use any one of 58 “over the top” (OTT) mobile communication apps. These include — but are not limited to — social media services like Facebook, Twitter, Instagram, and LinkedIn; instant messaging and voice communication apps WhatsApp, Snapchat, Skype; and dating sites like Tinder and Grindr.

The law in Uganda also placed a 1% tax on the use of mobile money, which is now the required method for airtime top up of SIM cards. With the average Ugandan already spending 15% of their monthly income for 1GB of broadband data, the new tax puts popular internet services out of reach for most people.

This is not just a matter of chatting with friends. As anyone in the region knows, WhatsApp in particular has become an essential platform for communication and information-sharing in Africa. Millions of people rely on WhatsApp groups to conduct business, communicate about local issues, read the news, and seek help in emergencies.

For many Ugandans, social media like Facebook and WhatsApp are a gateway to the rest of the internet. In an opinion piece for Global Voices, Ugandan blogger Pru Nyamishana wrote:

“The tax ignores a critical lack of digital literacy, particularly among poor Ugandans. When I interviewed women living in Bwaise, a slum in Kampala, I learned that for them, WhatsApp and Facebook are the internet. These are the only platforms they know how to use. So with the new tax, they will be cut off altogether.”

After the tax had been in effect for six months, the Uganda Communications Commission reported national internet usage rates had dropped by from 47.4% to just 35%.

On the heels of Uganda’s initiative, Benin approved a similar tax in September 2018, targeting mobile messaging and ‘Voice over IP’ calls (like Skype). It drove up the cost of a single gigabyte of data by nearly 250% but was repealed just days later, in the face of public protests.

The Zambian government announced a flat daily tax of 30 ngwees (US $0.03) on IP-based voice calls in August. Despite pushback from civil society and Zambia’s Chamber of Commerce and Industry, government officials went ahead with the tax, arguing that it would raise public revenues, bolster local telecommunications enterprises, and help cover the cost of investments in infrastructure.

“Jobs such as call centre workers, talk time sellers, conventional call technicians will reduce drastically if more Zambians migrate to internet calls and create jobs in America and elsewhere,” tweeted Dora Siliya, Zambia’s Minister of Information and Broadcasting Services.

Although this reasoning rang hollow for many internet users, Siliya’s argument is consistent with longstanding frustrations on the continent about foreign-owned OTT services that have captured markets for messaging and voice calls, changing the game for national telecom operators.

Countries in Africa are not alone in resenting how the data and advertising-driven business models of big tech bring few immediate benefits to local economies, while enriching technology companies in the United States. Google and Facebook are increasingly now also in the infrastructure game which will affect the power balance with telcos even further. Meanwhile, it’s a fact that popular OTT services have helped fuel the uptake of mobile internet, and enabled local businesses to operate more efficiently. They have been critical to creating a virtuous cycle of record growth in internet use, network investments, and also telco profits.

In a region where governments are known for restricting free speech through censorship, internet shutdowns, surveillance and legal threats, civil society and independent media also view OTT tax schemes as an attack on free speech. In two other cases, this is clearly warranted.

In Tanzania, a so-called “blogger tax” was introduced in April 2018 alongside new restrictions for online content, in a clear effort to limit online expression. It requires Tanzanian bloggers, YouTube channel operators, and independent website owners to register and pay roughly $900 USD per year to publish online.

In August, the Mozambican government decreed that individual journalists and media outlets using both traditional and digital platforms now have to register and pay between $500 to $3,300 USD for an accreditation license that must be renewed every five years.

Taxes like these propagate the misconception that internet access and social media use are luxuries. But their outcomes — like the drop in internet use in Uganda — offer a compelling case study on the importance of establishing protections for net neutrality. What citizens have emphasized in protests, and what local researchers have also demonstrated, is that access to a truly open internet is a boon for local economies, education, public health and life in general.

Do social media taxes make sense to you?

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  2. James B

    It sounds like this is being sold as a protectionist measure, but it's not clear from the article if local (national, or at least African) services would be exempted. If the purpose of the tax is to act as a tariff that opens a space for African messaging services, reasonable people could hold views on either side. But it's hard to believe that's what's happening here. It sounds like an attempt at censorship (in some cases) and a regressive money-grab that disproportionately hurts those who are just starting to climb the ladder of prosperity.

  3. Maciej

    In European Union internet access is subject to basic rate (the highest) of VAT. Why should be surprised that other governments consider it not a necessity?

  4. Jamshed

    In India we have to pay general taxes to obtain talk time on mobile phones. We also pay a tax on the use of internet connections for our desk tops, tablets, and miscellaneous gadgets. Is this not a violation of our freedom? On one side we talk of going digital and on the other we increase taxes / revenue streams for digital service providers / government this being a ridiculous and retrograde step.

  5. Zoracon

    I notice in gaming online I rarely see anyone from the African continent (maybe SA at times) online to play. And it makes sense now as to why. Restrictive governments imposing lack of access. It's not that just that the people are "too poor". This is a deliberate attack on access to the rest of the continent and the world.

  6. LouwN

    Ridiculous and preposterous and two steps back. For shame.

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