For a man who wants to rule forever, Yoweri Museveni’s actions in recent times is frightening, to say the least, for the millions of Uganda who are leveraging improved access to financial services and internet access to ascend the economic ladder.
Reducing access to information and financial services is a major way of fueling poverty, especially in African communities where poverty levels remain high. Prior to his quest for re-election in 2016, Museveni oversaw poverty reduce in Uganda from 31.1 percent in 2006 to 19.7 percent in 2013. Within the same period, the East African country became the fastest of Sub-Saharan country to reduce the percentage of its population living on $1.90 or less per day. According to the Borgen Project, urbanization accounted for 10 percent of the reduction of the poverty rate in Uganda between 2006 and 2013. “Those who move from a rural to an urban environment benefit from increased welfare,” the non-profit organization that is addressing poverty and hunger said on its blog. It added: “Seventy-nine percent of Uganda’s poverty reduction between 2006 and 2013 was in agricultural households. A combination of supply and demand, good weather and favourable prices due to increased market efficiency contributed to this success.” Technology has fostered market efficiency in Uganda, and the growth of mobile money in the country has increased inclusiveness and contributed to poverty reduction.
Commenting, last year, on the impact mobile money has had in Uganda, Jimmy Ebong, a research specialist at FSD Uganda noted that “the advent, growth and expansion in coverage of mobile phone has, to this date, been such an exposé in the development circles, particularly because of the way that mobile money brings poor people, in their various categories – men, women and youth to participate in the financial market”.
Ebong stated that mobile money is driving financial inclusion in Uganda. “In 2013, 56 percent of all adults were using mobile money services. By August 2016, the value of mobile money transactions had reached 3.6 trillion and balances on mobile money reached 326 billion,” he noted, adding that mobile money remained the predominant financial service in Uganda, with accounts increasing from 35 percent in 2015 to 38 percent in 2016. He added: “There is new evidence that having a registered mobile money account increases the likelihood of having some household savings.”
Mobile Money will sustain Uganda’s growth
According to the World Bank, building public confidence in the financial system to raise savings; adopting more cost effective modes of providing credit; and strengthening comprehensive and up-to-date regulatory and supervision frameworks, are key ingredients towards achieving the much needed growth acceleration and shared prosperity in Uganda. With mobile money agents usually known individuals and businesses, the confidence Ugandans lacked in the financial system has been passed on to mobile money agents. While only 16 percent of the adult population is bold enough to keep their savings at formal deposit taking institutions, mobile money accounts kept growing in the country. As at July, the number of registered mobile money users stood at 23 million, with about 50 percent considered active, judging from transactions from May to July.
Museveni knows this and used to prioritise bringing “more people into the formal managed economy” and changing Uganda from being a predominantly cash-based society. The country last year launched its National Financial Inclusion Strategy (NFIS) 2017 – 2022, which seeks to reduce financial exclusion from 15 to five percent by 2022. That mobile money is an importance piece of the NFIS puzzle is obvious, even to Museveni. But with politics, everything changes.
In 2016, Uganda blocked social media sites before Museveni’s swearing-in ceremony after his re-election sparked protests. Museveni said the social media sites were taken down as a temporary measure aimed at stopping “so many (social media users) from getting into trouble,” adding that “people use those pathways for telling lies”. The move was criticized by several rights group. Telecoms company MTN also stated at the time that it was disabling all social media and mobile money services, as directed by the Uganda Communications Commission (UCC). Fast forward to 2018, Ugandans pay Ush200 ($0.05) per day to access Facebook, Twitter, WhatsApp, Google Hangouts, YouTube, Skype, Yahoo Messenger, among others. Everyone, including the central bank, thinks it’s such a bad idea to tax Ugandans for using social media or mobile money, but Museveni tries to rationalise his move. In a shameless display of his lack of understanding of policy considerations that have traditionally guided the development of the taxation system in his country, the president asked; “is it too much for […] the mobile money senders and receivers to also make a modest contribution to the development of their country?”
Mobile money seemed to be making everything — poverty reduction, financial inclusion — Museveni ever wanted happen, but he needed more money to run the government he desperately held on to, so he started charging the same people he was dragging out of poverty. To send or withdraw money via mobile money, Ugandans are charged a 0.5 percent tax. In other words, when money is sent to a mobile money account, the sender pays; the receiver also pays to withdraw.
President for Life
African leaders seem to get so comfortable in power that they find ways, legal or illegal, to ensure they never leave. Museveni is currently serving his fifth term as Uganda’s president. The 73-year old has won every election since democratic rule began in 1996. Although the 1995 Ugandan constitution provided for a two-term limit on the tenure of a president, it was changed to allow Museveni run for more terms.
The Constitutional Court had on July 26 upheld the amendment of the Constitution to remove the presidential age limit which previously stood at 75. Members of parliament (MPs) of the ruling party had massively supported the removal of the age limit, with the president expected to also back the extension of their term from five to seven years. The latter didn’t quite work out as expected, as five judges unanimously nullified tenure extension for MPs. The judges declared it as unconstitutional, saying the people’s consent was not gotten. Miffed by their resolve, Museveni said the judges “spend more time on form and not substance, on procedure and not substance. With the five years, a lot of time is spent on electioneering and less time on development; the first two years settling in, the third year some work in the constituency and, then, by the fourth year, electioneering again”.
Power or revenue?
Museveni’s social media tax is seen as one of his tactics to strengthen his hold on the Ugandan presidency. Human rights group Amnesty International called the tax an attempt to silence the opposition, disguised as a revenue growing measure.
But the president can be proud, as social media activity has reduced in Uganda due to the tax; mobile money transactions have also dropped. Legal and Regulatory Director, Airtel Uganda Denis Kakonge said since the introduction of the tax on July 1, mobile money transactions have dropped by 33 percent.
The Director of Statistics at Bank of Uganda Charles Abuka supported Kakonge’s claim. He revealed a decline in mobile money transactions by Ush672 billion ($182.3 million) in the first two weeks of July.
Abuka reminded the government of its financial inclusion agenda, stating that the tax will hamper the impressive growth of access to financial services, which went to 55 percent in 2016 from 28 percent in 2010. The growth was attributed to the increased use of mobile money.
But Museveni says the tax stands, and his insistence lays credence to the opinion of people like Amnesty International’s Joan Nyanyuki, who said “the primary motivation behind [the social media tax] is to silence speech, to reduce the spaces where people can exchange information, and to really be able to control, with the recognition that online platforms have become the more commonly used way for sharing information,” and other political analysts who categorized his government as dictatorship light.