London — March 4, 2022
For a very long time, African governments have viewed the communications sector as the “golden hen” of tax revenue. These taxes seemed to grow like weeds in every part of the value chain, be it social media or mobile money. For the growing population of digital natives, these financial charges were the equivalent of a tax on life. Russell Southwood wonders if the tide is turning and why lower taxes would be good for new economic growth.
On Tuesday, the Democratic Republic of Congo scrapped the tax it levied on the registry of mobile devices after a vigorous campaign in the country’s parliament.
The decision was taken last weekend by the Congolese government during the Council of Ministers on the adoption of the draft decree setting the methods of calculation and the tariffs of the service revenues of the telecommunications regulatory authority.
Officially launched in September 2020, this tax was supposed to optimize the security and quality of service of mobile networks in the country, effectively combat counterfeit mobile devices by disconnecting devices identified as non-compliant and combat the theft of mobile devices. blocking reported stolen devices. The abolition of this tax comes after multiple calls from parliament and civil society actors, who have criticized the lack of “legal basis” and “traceability” in the management of the fees levied by this tax.
In July last year, Tanzania levied a tax on mobile money services. The fee, initially set at 10 to 10,000 Tanzanian shillings (0.4ȼ US to $4.31) per transaction. In the face of protests in July and August, Tanzanian President Samia Suluhu Hassan told Minister of Finance and Planning Mwigulu Nchamba and Minister of Communications and Information Technology Faustine Ndugulile to rethink costs . Subsequently, it was announced that the tax would be reduced by 30% to 7-7,000 shillings, depending on the amount of money transferred.
Nchemba’s ministry, making the most of a strategic retreat, said: “The government believes that the decision will bring relief to the people and enable them to raise funds to implement various development projects.” In addition to the reduction in the amount of the tax, the government also obtained a 10% reduction by mobile operators in their money transfer fees.
Ghana already has a 5% tax on mobile telecommunications, and Appiah, a policy analyst and development consultant in Accra, was concerned that the new 1.75% tax on 100 cedis mobile money transactions (about $16) and more, introduced in the last national budget, would add even more cost to consumers. This, in turn, risks undermining years of work to integrate rural and low-income communities into the financial system. “
Tensions are so high over Ghana’s electronic transaction tax that it sparked a fight between lawmakers in parliament in December. A vote on whether to proceed with the e-direct debit is now scheduled for January 18.
On January 1, Cameroon also unveiled a new 0.2% tax on mobile money transactions as part of a new 2022 tax bill that would have already been signed into law by President Paul Biya. Cameroon’s new mobile money tax has come under heavy criticism, sparking an online #EndMobileMoneyTax campaign in the Central African country.
“It is a lazy tax because it is easily collectible by using telecommunications and mobile transfer companies to collect taxes on behalf of the government,” said Rebecca Enonchong, the prominent Cameroonian entrepreneur and lawyer, at Rest of the World. Enonchong is helping lead the online protest because “the mobile phone tax will hit the poorest segment of the population for whom mobile money is the only access to financial services.”
Zimbabwe introduced a 2% Intermediated Money Transfer Tax (IMTT) in 2019. Although the tax is unpopular and Finance Minister Mthuli Ncube agreed to review it in December 2021, it is too lucrative to change. The IMTT, which applies to mobile money, electronic and wire transfer transactions, now accounts for nearly half of all corporate taxes the government collects.
With a global economy reeling from the aftermath of Covid-19 and sanctions against Russia for its war in Ukraine, African consumers are going to need all the help they can get. At the political level, a large number of African governments are now talking about how their citizens should acquire digital skills.
How will they do that if the devices and services they need become more expensive in tough times? Governments should use this time to encourage things that will make the economy more efficient. From this perspective, they should reduce taxes or remove them altogether from mobile money or social media used as an advertising medium to sell goods and services. As the Tanzanian example above shows, if citizens and legislators oppose it strongly enough, the government may be forced to back down.
Ethiopia: Mobile payments and financial services company Paga Group has partnered with Bank of Abyssinia, under National Bank of Ethiopia regulatory approval, to launch its online payment gateway in the country. Paga’s partnership with Bank of Abyssinia is both a milestone and a key strategic development in Paga’s growth strategy. Established in 1996, with nearly 700 branches and over five million customers, Bank of Abyssinia is one of Ethiopia’s leading banks.
Côte d’Ivoire: Orange, the leading operator in Côte d’Ivoire and Yabx Netherlands, a fintech offering credit products in several African countries, announced their collaboration with Cofina Côte d’Ivoire, a financial institution, to facilitate the financing of smartphones for Orange customers. The announcement was made during the MWC show in Barcelona.
The Smart Africa Alliance officially launched the Smart Africa Digital Academy (SADA) (SADA.atingi.org) at the Kintele International Conference Center in the presence of ICT Ministers from 18 Alliance Member States on Thursday, February 24, 2022. SADA is a pan-African dynamic learning ecosystem to improve digital skills qualifications, employability and meet the emerging talent needs of African citizens.
Microsoft has announced new initiatives to accelerate the growth of 10,000 African startups and accelerate investments in the African startup ecosystem over the next five years, under the mandate of its recently created Africa Transformation Office (ATO). The company’s recently launched Global Founders Hub will now be available to African startups through the ATO. The Founders Hub is a self-service hub that provides startups with a wide range of resources, including access to mentors, skills content, tools like Microsoft Azure and GitHub, and business and sales support .
Ethiopia: Safaricom, which as part of a consortium was named in May 2021 as the winner of the first new Ethiopian communications license, revealed that it was negotiating a network sharing agreement with incumbent Ethio Telecom.
Telesat, a satellite operator, and Liquid Intelligent Technologies announced a strategic cooperation agreement to explore reciprocal go-to-market strategies to bring Telesat Lightspeed Low Earth Orbit (LEO) satellite services to Africa.
DRC: Intelsat has been selected by Vodacom DRC to provide its Ku-band satellite services. Intelsat’s end-to-end managed CellBackhaul service will serve as an alternative backhaul service to select sites as part of Vodacom’s Rural Communications Solution (RCS) initiative to bring mobile services to deep rural sites in the DRC.
People: Ukheshe Technologies, pan-African financial technology enablement partner, has appointed Darryn Botha as Chief Information Officer. Botha’s role will include overseeing data security, maintaining a stable IT infrastructure, while enabling Ukheshe’s business strategy and enhancing its ability to engage and collaborate with customers… Strive Masiyiwa, founder of Econet Wireless Zimbabwe and a Zimbabwean telecommunications billionaire, left the company he founded nearly three decades ago to pursue new opportunities.
5G roundup: Econet Wireless Zimbabwe has partnered with Ericsson to launch 5G services in Harare… Mascom Botswana has launched its first 5G services in the capital Gaborone. The operator plans to install 5G at 111 sites across the country by the end of the year… The Communications Authority of Kenya (CA) has revealed plans to enable the rollout of pilot 5G networks This year. Matano Ndaro, director of licensing, compliance and standards at the CA, told reporters that the regulator has developed a roadmap that outlines strategies to facilitate the deployment of 5G technology. Ndaro revealed that the country will start authorizing the first 5G pilots this year, after which spectrum licenses will be awarded for operating commercial networks.