Tag Archives: social media

Stifling Economic Progress – Uganda can do better

Stifling is defined as, making one feel constrained or oppressed. Other terms for it are: Suffocating, Stagnant, Breathless, Unventilated and Confined. Today, I could say, “The Government of Uganda is stifling the basic survival of its economically active population.”

It is a known fact that jobs are hard to come by in this country and people have been encouraged to seek opportunities through self employment. Never mind the fact that those parroting this talk are belching daily on unfairly spent tax payers money.

As a business owner, for the last 21 years I have always encouraged my staff to set up alternative income generating ventures to insulate themselves from the very unpredictable economic environment we face as a nation. I am sure what I am talking about is best appreciated or understood by those who either are lacking jobs, self employed or have been hit by job loss. For a regular salaried and pensionable person, you could as well take this as a rant of frustration.

The growth of technology especially the internet has helped open up numerous avenues to facilitate multitudes of Ugandans get economically active. What the likes of WhatsApp, Twitter, Facebook and Instagram have done to revolutionise the business setup of this economy can never be underestimated. We might have kicked off using social media for gossip but that is no longer the case.

Social media has become a business highway for the many micro entrepreneurs trying to earn in order to fulfil their dreams. Many are buying and selling simple items like shoes, clothes, food, household items, spare parts, among others using social media. Others are selling services like writing articles/blogs, marketing, offering counselling, business support, monitoring, proposal writing, managing payments etc. The list is endless.

The nation might have been faced with a security threat that necessitated some level of drastic actions to avert but not to the extent of shutting down the internet in its entirety like it was done on the 13th of January 2021, a day to the nationwide elections.

You do not seal yourself in a vacuum just because you don’t want to breathe in toxic air. While there was a concern by the powers that be whose priority was regime preservation, it shouldn’t come at the cost of impoverishing the rest of society. Many of us do not earn regular salaries and our income on a daily basis is what makes us exist.

A colleague that I once worked with currently running an online electronics sales platform called me up two days back and his tone was way unlike him. It had this defeatist feel about it and when he told me how the internet shutdown due to elections had grossly affected him, I could feel it. He then asked me what organisations like The Internet Society of Uganda, The ICT Association of Uganda, National Information Technology Authority – Uganda have to say about this.

No sooner had I got off the call, than two others I know shared their frustration of believing in Uganda as their place of choice to chase their dreams of technological revolution. I nearly cried because I have been through this kind of frustration before and seeing it recur is simply a pointer to a gross sad state of affairs.

We are reeling from the effects of Covid-19 that have greatly diminished our incomes. As we mutate with the hope of guaranteeing our survival, those meant to steer the ship called Uganda are simply out of touch with reality. They may be able to comfortably pay school fees for their children anywhere in the world but that doesn’t mean that we all can even pay school fees with ease in local neighbourhood schools. Some people can’t even pay rent, let alone feed families simply because an income of a paltry UGX 20,000/= daily has been put to a halt.

For a fully fledged minister to come up and start threatening Ugandans using Virtual Private Networks (VPN) with arrest is simply a sign of a thought process in limbo. Hon. Peter Ogwang, as the State Minister for the Ministry of ICT and National Guidance, you have alot on your hands than run around like Tom chasing Jerry in the cartoon Tom & Jerry.

People simply want to survive, that’s why they use the VPN. Unfortunately some quarters are obsessed with viewing the VPN from political lenses while the majority of us are viewing it with economic lenses. Allow us breathe.

In my mother tongue, Lunyole, we have a saying that loosely translates to; When you press the nose hard enough, it ends up bleeding. Don’t make us bleed. Enough is enough. Allow us fend for our families the best way we can, after all, the responsibility of promoting business growth among the locals has been discarded in preference for foreigners.

Time is usually the best teacher. Repressive moves especially when misguided have a way of bouncing back to the sender. We all need a country that makes us happy and proud of being a part of it.

God Bless Uganda. I Love Uganda. For God and my country.

James Wire

Technology and Business Consultant

Twitter – @wirejames 

Email – lunghabo [at] gmail.com

The Wire Perspective – http://wirejames.com

Of Uganda’s Analog technocrats managing a Digital economy

The drive to increase tax revenue in Uganda has seen the Government explore all forms of novel ways of creating new taxes. One of those has been an attempt at taxing Social Media usage through a flat daily access rate.

Granted, we do appreciate the tight spot the Government is in as regards budgetary funding, however the misguided approach being used has turned the technocrats into headless chicken. A headless chicken will run around disoriented and aimlessly until it eventually dies due to shortage of blood.

In the run up to the Financial Year 2018/19 budget, various proposals were mooted including taxing Holy Books like Bibles and the Koran, introducing new taxes on Mobile Money transactions and Social Media usage.

Despite protests from different sector players, the level of insensitivity and ignorance displayed by the legislators as well as Ministry of Finance officials was very deplorable. They took on a one way street mindset with one goal, To ensure that the President’s thoughts on Social Media taxation are implemented.

Little did they know that they were setting the stage for a bigger fight with the consumers of the Social Media services. D-Day came and to our horror, the tax implementation went ahead as planned on July 1st 2018. The ensuing fracas is one that has turned Uganda into a laughing stock. All this because the technocrats that came up with this tax implementation chose to believe that they knew what they were talking about only to be outdone by a digitally alert citizenry.

Today, social media users as far as Butaleja district are comfortably using VPNs to bypass the need to pay the Social Media tax. Fifteen years ago, while training some university students, I had a hard time getting them to understand what a VPN was. Today, thanks to the Government’s misguided decisions, nearly all Ugandans with a smartphone understand what a VPN is and does.

Advice on Social Media Tax

Since this is my only channel that I can effectively use to advise the Ministry of Finance, Planning and Economic Development (MoFPED), I have chosen to share some ideas on how the government can consider gaining tax revenue from the Social Media giants.

Transactional Tax Surcharge: The government is better off engaging with the key players like Facebook, Google, and others to consider a tax surcharge on transactions originating from Uganda. As opposed to making every user in Uganda access social media after paying a daily tax, focus should be on any individual or organisation that transacts with Facebook. For example, VAT of 18% could be added outrightly onto each transaction. Thereafter, quarterly or monthly reconciliations can be made between Facebook and the Uganda Revenue Authority.

This can be achieved through protracted talks with these online giants. Infact, as opposed to approaching them as Uganda alone, we could come together as the East African Community and engage them. That way, we have a bigger voice than going it alone.

Flat rate tax: The government again through negotiations can consider a flat rate tax of say 2% of estimated market value of people accessing the platforms from Uganda. There are ways this can be determined using various matrix that have been developed over time. These could take into consideration; How many users access the platforms daily, weekly or monthly; The Average Revenue Per User (Varies per country and continent) e.t.c.

Misguided Excitement?

The person that sat down and simply scribbled numbers on a piece of paper in order to figure out how much money the Government could earn from Social Media taxation suffered from misguided excitement.

Res ipsa loquitur” (Facts Speak for themselves). Using publicly available information, I was able to work out the potential earnings from Social media in order to help set a bar of expectations that is more realistic.

GlobalStats indicates that Uganda’s social media usage is as shown below.


We see that Facebook at 82.7% takes the lion’s share of Social Media access. You may ask, what of WhatsApp? It’s also owned by Facebook.

For purposes of this article, let us explore Facebook. The number of people accessing Facebook from Uganda on a monthly basis lies between 2.7 million to 3 million. These statistics are pre-Social Media tax implementation.

The Facebook Quarter 1 2018 earnings results reveal that the company earned US$ 11.966 Billion of which 98.6% came from advertising alone. This implies that the average monthly income in the first quarter was US$ 4 Billion.

Of this quarterly income, the report indicates that 9.8% came from users in the “Rest of the World,” a category that combines Africa (where Uganda is), South America and the Middle East. This implies that the monthly contribution from this category was close to US$ 390 million.

The Average Revenue Per User (ARPU) for the “Rest of the World,” in the first quarter was at US$ 1.68 which works out to US$ 0.56 monthly. In lay man speak, a Ugandan who accessed Facebook during the first quarter of 2018 (January to March) contributed UGX 6,400/= in all those three months or UGX 2,130/= per month.

Let us take 3 million as the number of unique visitors that access facebook from Uganda on a monthly basis. They are likely to generate for Facebook the following income;

3,000,000 x 2,130 = UGX 6.39 Billion or US$ 1.68 Million

If Facebook had put a surcharge of 18% VAT on these transactions, then the Uganda Government would have earned UGX 1.15 Billion or US$ 286,000 on a monthly basis.

In a year, this translates into at least UGX 13.8 Billion or US$ 3.4 Million as potential tax from Facebook.

The same approach could be used for others like Google. The mistake made by the architects of this social media tax was to get too greedy after seeing how widely used Social Media is in Uganda. If only they had put effort in understanding how the digital economy works, they wouldn’t have entertained adding another direct tax to the users of Social Media.

By the end of July 2018, the statistics of Facebook are likely to show a big drop in user access from Uganda because of the VPNs that we are utilising to bypass and protest the tax. This will have a multiplier effect on the revenue valuations from Uganda.

It is therefore high time greater awareness is made on the Digital Economy in order to bring most of our technocrats on board. It doesn’t hurt to admit that once in a while mistakes are made. The focus should be on transforming that analog approach into a digital one.

Over to you Hon. Matia Kasaija, Hon. David Bahati and the no nonsense Mr. Keith Muhakanizi.

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