Category Archives: Business

I do blog on Business with a special emphasis on Small Business. How to set up the businesses, idea generation, and diverse topics focused on that niche area.

Is Mobile Money Tax saga evidence that amateurs are running Uganda’s economy?

For a number of years, I used to religiously contribute and give a commentary on the budgeting process for Uganda. At that time I was fully convinced that failure to participate would mean failure to see the change I want. However, over time, as I got a chance to read the Auditor General’s reports that showed how the Government was spending our money versus the budgeting, I was alarmed. Most Government departments struggled to get even 50% of their allotted budgets. For some departments, even 30% was a miracle, yet you had others that not only got all their money but were even given supplementary allocations.

This was the first indication to me that probably we have either hopeless systems in place or clueless technocrats running the Ministry of Finance. Come 2018, the same technocrats came up with a tax on Mobile Money Transactions. Using armchair calculations with the misguided belief that the economy runs in a vacuum, they simply extrapolated the amounts of money transacted on the Mobile Money platform and salivated at the prospect of getting a mere 1% of that. Very typical of simpleminded brains.

Without wasting time, they employed the services of their Ministers who in a typical manner of “act now and think later” went ahead to become the poster boys of this tax. Matters were further worsened by the appalling nescience (cluelessness) of our Parliamentarians on matters pertaining the economy. Numerous submissions were made by different industry players and consumer organisations but like cows headed for the abattoir, the MPs couldn’t listen.

Screen Shot 2018-08-02 at 09.32.29On July 2nd, I tweeted thus, “when you see a cow excitedly walking into an abattoir, simply because it has seen other cows there, just buy yourself a packet of popcorn and get ready to watch the unfolding soap.”

For those that were pushing me to say something on this matter, there-in lies the reason I took this long. Knowing that there was a Telenova unfolding, my preference was to first watch the amateur actors do their thing.

A fortnight into the month of July, Hon. David Bahati the Minister of State (Planning) in the Ministry of Finance, Planning and Economic Development, excitedly told the nation how the Government had collected UGX 5 Billion in Mobile Money (MM) tax during the first week of its implementation. Honestly, watching him say that on national Television, I could see a typical pseudologist. He conveniently avoided sharing the Tax revenue message in context of the bigger MM picture. He mentioned nothing about the drop in transactions and how it translated into numerous job losses among other things.

We have now heard from the Bank of Uganda how during the first two weeks of the MM tax implementation, transactions dropped by UGX 672 Billion. Compare this to the 5 Billion that the minister was hysterically fronting as a measure of success for the tax. This reminds one of the adage Garbage In Garbage Out (GiGo).

While I am a proponent of a tax compliant citizenry, I’m not impressed by the topsy-turvy (kifuula nnenge) approach in which our economy is being run. Honestly speaking, we have reached where we are largely as a result of mere luck, donor good will and proceeds of local as well as global corruption. Over the past decade or so, genuine economic growth seems to have eluded us.

This Ministry has simply failed to oversee a turn around of this economy with the aim of making it more vibrant. Apart from knee-jerk responses to pertinent issues that arise, there seems to be a well calculated culture of gambling perpetrated by the office bearers.

Over the past decade, the number of Ugandans that have been pushed out of legitimate business engagements has soared. We could always choose to be wishy washy about some of these things and blame them entirely on poor management skills but how do you explain the massive closure of most locally run businesses? When genuine tax payers have to compete with a corrupt elite whose businesses never get to pay tax, the end result is closure of the genuine guys and lower revenue collection for the government.

The big headed mindset that the ministry technocrats have which aims at merely appeasing the President while letting everyone else go hang is being tested right now. They have always thought that they can bulldoze their way into anything but this time round, Ugandans know better than tolerate bull-shit.

While I know it is a culture of our government to reward incompetents at the expense of the competent, I still call out to the powers that be requesting them to do a total shake up of the Ministry of Finance. Starting with the line ministers all the way down to the various technocrats, heads need to roll. There is nothing much these busy bodies are doing to advance this economy apart from politicking and being transaction advisers to investors who reward them privately. It’s a pity that anything outside the docket of security hardly attracts the serious scrutiny of the Head of State but the more he continues with this aloof approach, he just might wake up when it’s too late. Our economy shall be in shambles with no one to tax.

As a parting shot, I believe something is definitely not right with the way our Telecom players are making tax declarations and in this regard, I am a self confessed supporter of efforts by the Government to establish ways of getting to the bottom of this matter. A look at the kind of charges we pay for MM transactions leaves one wondering what the actual cost is for a mere transfer of bits and bytes over a network that is being utilised for many other services too.

James Wire is a Business and Technology Consultant based in Kampala, Uganda
Follow @wirejames on Twitter.
Email lunghabo [at] gmail [dot] com

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