“I don’t think the government knows exactly how mobile money operates. They are talking about how mobile money has not been paying taxes but we have been paying taxes since it was started in 2009. You have to register a company that pays 6%, then in 2016 there was an increase in charges by 1% where the charge that was 800 became 880 and this burden was placed on the customer. That tax is enough. Before discussing tax, the government needs to know what mobile money is. How does it work? How is it done? They need to get someone who works in the sector to explain to them. Someone from a telecom company to explain how the tariffs are made, an agent to explain how it works and a customer to show them how it is used so they can fully appreciate the mobile money situation,” says Jacent Nakawanga, a mobile money agent in Nabbingo, a parish in Wakiso district.
Jacent, like the majority of agents in the region have seen their transactions cut down by more than 70% since the beginning of July when the 1% tax on all mobile money transactions was implemented. This and the social media tax have been received with universal outrage off and online, where people across all ages, professions, political spheres have condemned the taxes and rejected them. Demonstrations have been held, hashtags have trended on Twitter and petitions have been signed in a bid to express displeasure with the new taxes.
Hearing from mobile money agents on the outskirts of Kampala, there is a unanimous belief that this is the beginning of the end for mobile money.
“Back in 2009 when we started, there were few people in the business so it was very profitable. Then the competition grew between 2014- 2016 when everyone who had failed to get a job joined the business. Transactions dropped from 300 per day to 100 and we could make about 6 million in profit every month. Now with this tax customers are choosing to take their money to the bank or keep it at home.” Says Rita who operates an Airtel and MTN mobile money kiosk at the busiest entry point of the market in Nabbingo. “Agents are leaving the business. I am watching my family business die. Everyone says they are not depositing any more money once they have withdrawn. As a family, we are also considering leaving the business because it is no longer lucrative.”
In response to the rage induced by the tax, the Minister of Finance, Hon. Matia Kasaija said the tax had been implemented erroneously and the State minister of finance for planning, David Bahati confirmed the 1% levy on deposits would be removed. The president in a statement delivered via WhatsApp a day later established that the tax should have been 0.5% instead of the 1% that had been passed by parliament. Even with this back and forth among the legislators, would these changes be enough to harmonize the dwindling relationship between agents, customers and telecom companies?
“I don’t think it will change anything because even the 1% they said they had removed, is still there. I deposited 12,000 on a customer’s phone yesterday and they deducted 2,210 which was even more than the 1%.” Said Mbaziira, a mobile money agent. “The government has a lot of debts with no clear plan of paying them back, so they have to find all ways to take people’s money. Even with the social media tax, that 200 from the 40 million people of Uganda leads to over 8billion per day. They keep borrowing more money and we pay all these taxes but we still do not see any progress. The roads are impassable, hospitals have no medicine, schools have no furniture but they continue to squeeze the ordinary Ugandan for more money.”
Mobile money had gone a great length in revolutionising the way people keep and used their money. Over the years, people have embraced the idea of a cashless society, using their phones as banks and conducting all their transactions digitally from paying utility bills, to school fees, shopping, sending money to the village and so on. With the implementation of this tax, we risk people going back to banking, which according to Jacent, is analog and cannot do what mobile money has so easily done.
She says, “People used to keep money on their phones but now customers have lost hope in mobile money. It was the bank for a common man. Customers are not making transactions above one million anymore because the tax really eats into their money. Before I would get customers making transactions of up to five million.”
The tax has not been well received by customers as well and the agents continue to face hostility as people think they are being cheated.
“Customers are abusing us. They think we are the ones cheating them since we do not have a standard charge for transactions because the tax changes on every transaction. Indeed, some agents have started cheating customers so they can also make a bigger margin. There is confusion among agents as to what the rates are and confusion among the customers as well. What has made it worse is that the telecom companies are not coming out to defend us or educate the customers on the new changes and how they affect them. They are not saying anything about the tax, yet we see messages everyday advertising their other products.”
This tax is also being seen as an affront to employment and a threat to security because youths, who dominate the trade, are deliberately being pushed out of their businesses.
“The government has no jobs for the youth but here comes an opportunity where even a person with one million can make a profitable business and it is being shut down. They are telling people to become self-employed and stop looking for jobs but when they do, they are sabotaging them.”
Jacent further condemns the silence of telecom companies on this issue and tasks them to show solidarity and support to their customers and agents.
“Agents are confused, customers are confused and the telecom companies have not come out to clear the air. They reduce our commission and push all charges to customers, yet their charges are not touched. We should all share the burden,” she says. “Telecom companies need to be tasked to account for the tax we have been paying. They should also explain how they come up with these tariffs.”
In light of the widespread rejection of the tax, conflicting communication from the legislators, confusion by agents and customers alike and silence from the telecom companies, the agents are left stranded, right in the middle with little hope for their businesses.
“If this tax is not removed, the whole industry is going to collapse totally. Agency banking which would have been an alternative is very expensive and it doesn’t have the flexibility mobile money has. Going back to banks is analog because you cannot send me 10k in a bank which could easily be done with mobile money. It is either mobile money or nothing.”