Weekly digest for 9 July 2021
KEY READING FOR THE WEEK
This week’s main story is a follow-up from last week on the tax increases in Kenya and Uganda. Tax increases in both countries were effective from the 1st of July. But the difference is that, in Uganda, the major operators (Airtel and MTN) have absorbed the 12% price increase. Smaller operators, like Smile, initially passed the price increase on, but had to change course and absorb the price increase. In Kenya, in contrast, the price increase has been passed immediately onto consumers. Why the different treatment? Part of the explanation is that an airtime tax of 12% already existed in Uganda. Introduced in July 2014, the airtime tax was effectively a data tax as well. If a customer reloaded their account with airtime, but decided afterwards to convert it to data, they had already paid the 12% tax. The new data tax of 12% means that the consumer can’t bypass the airtime tax. So, while it looks very altruistic of the Ugandan MNOs to absorb the new data tax, MNOs were already collecting a 12% tax for many customers.
OTHER WEEKLY NEWS FROM AROUND AFRICA
- Nigeria: The Nigerian Federal Inland Revenue Service (IRS) has issued a directive to close many of Multichoice Nigeria’s bank accounts because it has not paid a tax bill of US$4 billion. Like a similar case against MTN Nigeria, this seems to be a blatantly political move since Multichoice’s entire African revenues were only US$3.7 billion in the 2021 FY.
- South Africa: There might be a resolution to the spectrum saga as ICASA announced that a compromise deal is close and delayed its appearance in the court case brought against ICASA by Telkom.
- Angola: The Angolan government is considering a tax holiday for Africell for a period of 8 years. Africell is Angola’s 4th mobile operator and launched in December. This is taking place at the same time as the Angolan government has nationalized Movicel.
- Malawi: The World Bank says that high prices and unpredictable connectivity means that the country is losing out on US$189 million in additional GDP and US$33 million in taxes. (Full disclosure: RIS contributed significantly to these findings).