The Independent Uganda: You get the Truth we Pay the Price
Go digital
Going forward, the World Bank says sub-Saharan African economies could benefit from the digital economy, a move that could unlock new pathways for inclusive growth, innovation, job creation, service delivery, and poverty reduction in Africa.
Digital technologies could, for instance, help ease information asymmetry problems and improve communication by reducing search costs and potentially improve market efficiency.
Mobile phones, for example, could help reduce informational barriers for consumers, producers, and traders and facilitate learning about prices while other mobile applications may also help farmers, traders, and firms to identify potential buyers (suppliers) for their products in an expanded geographic area.
World Bank says low-income individuals—especially those living in remote, rural areas—have restricted access to formal financial institutions and they tend to resort to costly self-insurance mechanisms to share risks, and mobile money provides a safe method for individuals to deposit savings—especially for more immediate needs.
Mobile phone– based applications can also be used as a teaching tool in classrooms or as substitute teachers, which in the process can boost the acquisition of educational skills by school-age children and adults.
However, in order for this to happen, Africa needs to implement reforms and promote investments in the digital economy to accelerate growth—and possibly, leapfrog the traditional growth model—while building core infrastructure, systems, and competencies.
Digital handicaps
It, however, remains to be seen how a region that only has 27% of its 2.3bn population hooked to the internet, few citizens with digital Identity Cards, few businesses adopting digital technologies and only few governments investing strategically in developing digital infrastructure, services, skills and entrepreneurship can be transformed by the digital economy.
Still, the World Bank insists that the strong entrepreneurial mindset in Africa and the growing number of digital entrepreneurial intermediaries, can translate this potential into vibrant or comprehensive digital entrepreneurial ecosystem with commercial digital hubs that can generate talent to compete at the global level.
But the World Bank warns that the digital economy requires a strong analogue foundation, consisting of regulations that create a vibrant business climate and let firms leverage digital technologies to compete and innovate, skills that allow workers, entrepreneurs and government officials to seize opportunities in the digital world, and accountable institutions that use the internet to empower citizens.
This is something Juliet Nanfuka, the research and communication officer at the Collaboration on International ICT Policy for East and Southern Africa (CIPESA) agrees with.
She told The Independent on April 18 that much as the Uganda government has put in place enabling infrastructure (national broadband backbone) the actual cost of accessing internet by individuals might be undoing some of these gains.
ICT experts say there are perhaps few African countries where the evolution of the digital economy has been more apparent than Uganda over the last 20 years.
Last year, a United Nations Conference on Trade and Development (UNCTAD) e-commerce assessment report of Uganda noted how digital applications have encouraged the growth of micro, small and medium sized enterprises through access to ICT-enabled financial services and marketing.
A quarterly communications market report by the Uganda Communications Commission (UCC) for December, 2017, noted how Uganda had 18.8 million internet subscriptions representing a 48% penetration rate. The bulk of internet access (77%), the report noted, is via mobile whose penetration rate stands at 65 connections per 100 inhabitants.
There were also 23 million mobile money subscribers in the country of 38 million people and there were more than 340 million transactions during the period under review, totaling Shs 18.1 trillion (US$ 4.7bn).
But in an unprecedented development, beginning July 1, 2018, social media and mobile money users were directed to pay a tax of Shs 200 (US$0.05) per day to access various social media platforms including Facebook, WhatsApp, Twitter and LinkedIn while mobile money users were initially taxed 1% on deposits and withdrawals on top of a revised excise duty of 15% up from 10% on transfers.
President Yoweri Museveni supported the move saying the tax would rein in on social media users who use the platforms for peddling gossip and lies. Critics said the move threatened to derail the gains that have been registered over the years.
Nanfuka said more progressive policies and taxation models that directly affect citizens need to be reviewed. The digital economy should be looked at in terms of local content, affordability, inclusion, and accessibility of digital platforms.
For Dr Fred Muhumuza, an economics lecturer at Makerere University, the digital economy should be part of the menu not a cure-all for the woes of economies in sub-Saharan Africa because of the nature of the economies, its people and the political and regulatory environment in these countries.
Muhumuza told The Independent on April 19 that because most of the policies in countries like Uganda are politically motivated, it might be hard for people to tap into the digital economy like South Korea and other Southeast Asian countries have done.
“But even in trying to do so, we cannot copy and paste policies from other regions of the world; we need to support our own innovations, strengthen our infrastructure and lower the costs of access to these and many other technologies.”
He, for instance, says Uganda’s access to electricity would markedly improve if, for instance, there was deliberate support from the government for people to access solar energy technologies.
“We need to interpret these technologies, domesticate them as well as allow innovations that are locally generated and promote them,” he told The Independent.
But that is not all.
UNCTAD says the absence of relevant data on the ICT sector, such as e-commerce statistics is impacting on the capacity of states to make informed policy and implementation decisions.
“Governments need to design policies and regulations to significantly increase broadband deployment (especially to rural areas to bridge the urban-rural divide) and investment in the tech sector through public-private partnership extending tax incentives for infrastructure investment to private businesses,” UNCTAD said in its report.
“There is also a pressing need to integrate a gender perspective in all relevant policies and strategies and to make a concerted effort to mainstream women empowerment in strategies, policies, and budgets addressing issues of gender equality, as well as focusing on accessibility, affordability, safety and digital skills in Africa.”
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