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Taxing Innovation: Wehdone Africa

By Posted on 5 6 m read 226 views

First of all, I feel like I would be a prodigal African if I don’t clearly state that Africa is not a country. So guys, Africa is not a country. It’s a continent in which 54 recognised states exist and it accounts for 16% of this world’s population. It’s also the world’s second largest and second most populous continent. Thanks.

 

Sometimes, however, I can understand when some people (save from colonisers and those who are just being ridiculous), regard the continent as a country.  This is because there’s a lot of copying going round this continent that’s making us look alike. And you know, if it was good copying, I wouldn’t mind. But it just seems like it’s cooler for some African nations to copy weird and unreasonable things from their brother/sister nations. It bothers me. What with self-sabotaging, non-visionary moves against the future of the nation, unbelievable corrupt practices, old and aged mortals retaining power for as long as their ragged breath will allow – I mean, Equatorial Guinea has the world’s longest serving president, Teodoro Obiang Nguema, followed by Cameroun, the republic of Congo, and you have Uganda and Chad on that list as well.  

 

Anyway, my point is that  there’s always something weird to copy and this article is focusing on the latest trend skipping through Africa – the taxation of OTT services and social media.

 

I will assume you know what social media is, but OTT services can sound strange so I’ll explain. OTT simply stands for Over-the-Top, and so OTT services are services provided via the internet, and over traditional networks. It therefore means that consumers (you) can take advantage of these services without having to subscribe to traditional cable or satellite. We have tons of examples like the calls you make via skype or WhatsApp; the texts you can now send via Facebook; the movies you can now watch on NetFlix, and so on.

 

Yes, surely, if you were running an MTN or an AIT, you’d be scared a little bit. You’d ask yourself, ‘Gosh! Who are these technology people coming to disrupt my work and take all my money?’ but then, because you’re reasonable, what will you do? You’ll purpose in your heart to compete and  leverage on this new tech. You’ll understand that this is business – disrupt or die. You’ll understand that the OTT people are only building on your existing framework and so it means you’re not  that useless. You might even venture into OTT services as well in order to meet your consumers on both ends. You can invest or partner with your OTT competitors maybe? If you’re an ISP, you may strengthen your broadband and focus your energy on providing the best internet services (80/20 principle, shebi?). You can offer consultation to these tech people on the “psychology of the market” (or any other fake deep marketer thing). My point is that, what you and your government don’t do is what these African countries have done:

 

a. Uganda: Uganda was our leader-man. The government of Uganda formulated a policy which took off from the 1st of July 2018. The policy provides that subscribers in Uganda will have to pay an excise duty Ugx 200 ($0.053, N20) per day, to use OTT services. The President had earlier mentioned that he hated how Ugandans use social media for gossiping. He noted that he will not tax internet use for education or research, but he will tax the use of the internet for gossiping – and in the width of his knowledge, only gossiping is done on social media. Hence, while you might not need to pay a tax to browse Wikipedia, you will need to pay one in order to open your twitter. This is all levels of funny, but I’m not even laughing. I spoke to some Ugandan colleagues about how this works and here’s it: You click on your twitter icon to do some gossiping (per usual), but you can’t gain access into the application. A pop-up will show up telling you to pay your tax, and until you pay it, you cannot access social media in Uganda. According to President Museveni, “… we need resources to cope with the consequences of their lugambo (gossip),” Over 50 apps are affected including, Instagram, Telegram, WhatsApp, Twitter, Skype. Some organizations have however sued the Ugandan government  in its constitutional court.

 

b. Zambia: A month after this, Zambia followed by taxing its residents a 30 Ngwe ($0.1, N36) levy on internet calls over platforms like WhatsApp, Skype and Viber. According to their president, Edger Lungu, the new tariff was designed to protect the telecommunications industry and jobs in such companies, following the ‘rise in the use of internet phone calls at the expense of traditional phone calls.’ (awww. So kind and thoughtful! *sniffs* ugh!)

 

c. Benin Republic: So Benin Republic, in August, too was like, ‘Wait! You guys are having all this fun without me. I hate you!’ And so in late August, it decided to tax its citizens for accessing the internet and social media. It proposed a 5CFA Francs ($0.008, N3.17) per megabyte tax on Facebook, WhatsApp and Twitter.  But the citizens of Benin Republic are sharp and they were like, ‘Yo! We’re not even mad, but you are!’ And so they started this campaign on the same social media (touché) with the hashtag, #TaxePaMesMo (meaning, “Don’t tax my megabytes”). They are cool.  The tax went into force mid-september, but three days after, it was repealed by the government. Yay for the people!

 

d. Perhaps, Nigeria?: Well we aren’t there yet, but it looks like its streaming (pun intended) down to us. I have been seeing some strategic news articles, and press statements by Telcos and Telco representatives in Nigeria, nagging about how OTT services are killing them – basically pity stories. And this article says that we are witnessing the “umpteenth time” telecommunications operators in Nigeria have registered their displeasure with the activities of OTT services in the industry.

I mean, The Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON) said, “…social network operators do not invest in infrastructure, but ride on the infrastructure of MNOs to provide free services to customers at the detriment of MNOs who have invested so much to build their infrastructure and are still investing in the maintenance of such telecoms infrastructure.

 

I have also seen a similar kind of article in the Zimbabwe press on how OTT services are cutting mobile revenue. So maybe we should be expecting news from these quarters soonest?

 

Are telcos really making a loss as a result of OTT? Uh, yes. But is this the best way to tackle this. Uh, no. We should embrace innovation and the development of technology, and not stifle it. Don’t make consumers pay for the shift in business models. It’s ironic, really, because these services are evolving to cater to the consumers and yet the government is bent on them suffering for it. These policies are widening the digital divide in Africa which is already too wide for the 21st century.


But what I do know?

Oh. And just as side gist. Did you hear what also happened in Tanzania? In March 2018, their government ordered that all Bloggers, Vloggers, Podcasters, Online radio personalities and other online forum owners must register with the government and pay about $900 (N327,150.00) for a licence and are also obligated to pay some annual fees.  My friend, Sarah, suggested that everyone affected by this should also charge fees for readership – since everybody wants to be mad.

 

Whew! Mama Africa!

 

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5 Comments
  • Boma Lawson
    October 6, 2018

    This is succinct and educative. This trend is really sick, consumers shouldn’t bear the burden(or at least alone). This is the need for tech experts in a nation’s economic and financial team. Good work babes

    • Adeboro Odunlami
      January 22, 2019

      Thank you so much Boma! Consumers really should NOT.

  • Praise Udemba
    October 9, 2018

    When I saw the title of the article i assumed it was about Africa doing something nice in relation to taxation! But I’ve read through and…sigh. Well, if the Nigerian Government wishes to copy as well, it’s well established that Nigerians will no hesitate to reach like the people of Benin Republic.

    Insightful article, Adeboro. Well done ❤

    • Adeboro Odunlami
      January 22, 2019

      LMAO, Your first line. Thanks so much Praise. I hope there’s no copying by Nigeria!

  • […] not calm down. I worried because I do not think of it as an action beyond our government. Remember my article on African Governments copying each […]

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