Opinion: More still needs to be done to lower internet costs in Uganda


By Obedgiu Samuel

The plan to scrap the OTT tax, which Uganda Revenue Authority (URA) said had yielded less-than-expected revenue.

Since the government shutdown of the Internet a few days to the January 14th most fraudulent elections which involved varieties of cases in regards to human rights abuses, the risk-value of investors that seek to use the Uganda internet has gone up.

Instead of addressing that, they are now imposing higher taxes.

A recent study by telecom regulator, Uganda Communications Commission (UCC) put the cost of acquiring 1 gigabyte of internet in Uganda at $2.67(Shs9819).

Compared to Kenya (President H.E Uhuru Kenyatta ) , Tanzania (President H.E.Samia Suluhu Hassan ) and Rwanda (President H.E Paul Kagame ) at $2.41(Shs8863), $2.18(Shs8017) and $2.18(Shs8017) respectively, Uganda’s is the highest.

This tax is even going to make data more expensive, making businesses’ cost of operation even higher. The cost of internet has many dependencies, notably the cost of landing services in country from the fiber links at the coast lines, cost of backhaul through our neighbouring countries Kenya and Tanzania.

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The situation is also exacerbated by the low internet penetration ranked only at 38 per cent propelled in part by low smartphone penetration at only 20 per cent.

Recently, Google ‘s balloons are expected to revolutionalise data transmission and accessibility pulled out of operating in Uganda. Now government just wants to tax.

Even as Uganda has made big strides embracing 3G, data caps and very high broadband costs mean that Uganda still needs much to do in terms of infrastructure to lower costs for broadband if Uganda is to enjoy more economic and social benefits coming with broadband.

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We hope Uganda Communication Commission and other stakeholders are working harder to try to address the challenges that are still keeping broadband access very expensive.

MTN Uganda , Airtel Uganda and other Telecom companies in Uganda pay a VAT of 18% and excise duty (airtime tax) of 12% bringing the total tax burden to 30%.

This has meant that airtime in Uganda remains comparatively far more expensive, locking out a large chunk of the population from cell phone use, and consequently limiting their economic potential.

Countless studies by the World Bank and telecoms industry bodies have shown that a rise in the spread of mobile communications often produces a huge positive impact on GDP growth.

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This means that if this 12% tax is imposed, the selfish telcos will push the cost to the final consumer by increasing prices. “The world over, excise tax is a luxury tax mainly put on products like cigarettes, cars, perfumes etcetera, never on basic services like communications.

Uganda’s tele-density, while having improved tremendously in the last ten years, remains only an unremarkable 16 per cent against Kenya’s 30 per cent and Tanzania’s 25 per cent.

Uganda is the only country in the world with excise duty on airtime, even Rwanda which had introduced it realised its harmful macroeconomic impact and abolished it.


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