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THE STATE OF ICT IN UGANDA ALISON GILLWALD, ONKOKAME MOTHOBI, ALI NDIWALANA AND TUSU TUSUBIRA ACKNOWLEDGEMENTS This research was made possible by the support received from Canada’s International Development Research Centre (IDRC and SIDA). The nationally representative ICT access and use survey referenced in this report forms part of a survey of 22 countries in the Global South (10 in Africa) that canvasses barriers to access from those not connected, as well as the challenges to optimal Internet usage even where there is coverage or the individual has connectivity (see After Access 2017). It draws on ongoing policy research and indicator development done in conjunction with the International Telecommunications Union (ITU). This national survey was undertaken with the assistance of the Uganda Communications Commission, the National Information and Technology Authority-Uganda, the Ministry of ICT and National Guidance, and the Uganda Bureau of Statistics. Research ICT Africa’s Uganda partners: Eng. Dr F. F. “Tusu” Tusubira and Ali Ndiwalana of Knowledge Consulting (KCL), led the fieldwork for which training was performed by Dr Onkokame Mothobi and was also supported by Jan Schenk of ikapadata. The report was prepared by Dr Alison Gillwald and Dr Mothobi with Dr. Tusubira and Ali Ndiwalana. Policy Paper Series No. 5 After Access: Paper No. 8 The State of ICT in Uganda https://researchictafrica.net/2019_after-access-the-state-of-ict-in-uganda/ May 2019 SERIES EDITOR: ALISON GILLWALD Assistant to Editor: Broc Rademan Proofreading: Lee Smith Typesetting: Karen Lilje [email protected] Research ICT Africa 409 The Studios, Old Castle Brewery, 6 Beach Road, Woodstock, 7925, Cape Town, South Africa Tel: +27 21 447 6332 | Fax: +27 21 447 9529 International Development Research Centre Centre de reserches pour le développement international ii EXECUTIVE SUMMARY In line with global commitments to improve digital affordability level revised from five percent to two percent inclusion and to realise the Sustainable Development of average national income, 500MB of data should Goals for 2030, the Government of Uganda has com- cost less than UGX 5 000 to fall within this affordability mitted the country to developing a digital vision for measure. The RIA African Mobile Pricing (RAMP) Index Uganda. It aims to build a digitally-enabled society that indicates that in Uganda in 2018 it would cost UGX 10 000; is “… secure, sustainable, innovative, transformative … far above the means of a country with a GNI per capita to create a positive social and economic impact through of only USD 1 820, a per capita income level which the technology-based empowerment”. majority of the population live below. The 2018 RIA After The Digital Uganda Vision provides an overarching Access Survey confirms that affordability of devices and framework that responds to the national Vision 2040 by services is the main constraint on uptake and use. providing a unified ICT policy direction. It further pro- vides the Government’s integrated policy and strategic SOCIAL NETWORK TAXES framework to show how information and communica- A number of contradictory policy and fiscal interven- tion technologies (ICT) can empower Ugandan citizens tions have compounded this problem undermining and achieve the goals of universal inclusion, sustainable efforts to realise the Digital Uganda Vision. In 2018, the development, economic progress and poverty eradica- Ugandan Government introduced retrogressive social tion through digital innovation. media and mobile money taxes. Mobile money users are charged 0.5 percent on the value of withdrawal trans- POOR INTERNET PENETRATION actions, in addition to excise tax levied on withdrawal The Vision aspires to deliver a variety of government and fees. The social media tax of UGX 200 (USD 0.05) per day private services electronically in various fields – educa- was introduced on the use of 60 mobile apps, including tion, health, agriculture, social security, banking, justice Facebook, Instagram, Twitter and WhatsApp. The 2018 and communication. The current draft of the Vision is con- After Access Surveys and data demonstrate that social strained however by the fact that Uganda has one of the media sites are the main drivers of Internet uptake lowest (14%) Internet penetration rates of the 10 African in Uganda and across the continent. They are also a countries surveyed by Research ICT Africa (RIA) as part of significant substitute for costly voice and text services the Global South After Access Survey conducted between – a central strategy for citizens trying to make commu- 2017 and 2018. Only Mozambique (10%) and Rwanda nications more affordable. The social media tax has (9%) have lower penetration rates. The other countries impacted negatively on social networking use, which in the Survey – Ghana, Kenya, Lesotho, Nigeria, Senegal, has impacted negatively on mobile operator revenues South Africa, and even Tanzania, another least developed at a time when they are making the hard transition country – have higher Internet penetration rates. Internet from voice to data services. The impact on this is not penetration is not the only area in which Uganda lags. only that the poor take the brunt of the tax (instead of Less than half of the population own a mobile phone, the global platforms that are not impacted at all), but whereas this market is close to mobile phone saturation the Government does not actually generate the antici- in countries such as South Africa (83%) and Kenya (87%). pated revenue from the social networking and mobile Although data prices in Uganda appear competitive money taxes as people curtail their use or find ways to and relatively low compared to other African countries, circumvent the taxes through virtual private networks. data use remains constrained, even for those who have Moreover, it has a negative effect on productive taxes managed to overcome the price barrier of an Internet- and operator profits that subsequently decrease as a enabled device. With the Broadband Commission’s result of reduced data usage. EXECUTIVE SUMMARY III These kinds of effects impact negatively on the Digital per capita of USD 5 311 and USD 6 026 respectively. Uganda Vision in terms of digital and financial inclusion. Uganda has a huge urban–rural gap in Internet use of The taxes are likely to reduce Internet penetration, but 70 percent, where only nine percent of Ugandans living also the intensity of use, which is built into models in rural areas have access to the Internet and about a that indicate that a critical mass of at least 20 percent third (30%) of urban area dwellers using it. Only two is required for a country to enjoy the network effects countries – Rwanda (77%) and Mozambique (87%) – associated with economic growth and development. have greater urban-rural Internet access gaps. South Early evidence released by the Uganda Communications Africa has the lowest Internet urban–rural gap among Commission (UCC) on Twitter, national revenue services African countries surveyed, at 36 percent, higher than reports, and operator revenue reports, indicates there Argentina (-6%), Colombia (23%), Nepal (22%), as well as was a significant drop in both data use and operator Guatemala and Pakistan 13 percent. The gender gap in revenues between when the tax was introduced and Uganda’s Internet use is moderate, at 25 percent, larger November 2018 (when operators published their than the gender gap in Argentina (1%), Colombia (-6%), revenue reports). South Africa (12%), Lesotho (14%) and Senegal (21%). Both taxes come on top of already high excise duties (12%) and VAT charges (18%) that constitute about 30 INHIBITORS OF INTERNET USE percent of retail prices, and which have already con- The lack of electricity and underdeveloped ICT infra- strained uptake and use. Additionally, operator prices structure are the primary causes of huge discrepancies also reflect a universal service levy of 2 percent over and in urban–rural Internet use and mobile phone penetra- above relatively high company taxes. tion rates in Uganda. Only 18 percent of households in Uganda have an electricity connection, with an urban– DIGITAL GAPS rural electricity gap of 85 percent. Half of those who do The 2018 After Access Survey shows that Internet not use the Internet (86% of the total population) have use, mobile phone penetration, and the Internet use no Internet-enabled devices such as computers and divisions between genders as well as urban and rural smartphones. Uganda has the second-lowest smart- dwellers are correlated with GNI per capita. Uganda is phone device ownership in the countries surveyed at 16 classified as one of the least developed countries – a list percent of the total number of mobile phone users, with of developing countries that, according to the United only Rwanda’s nine percent performing worse. Other Nations, possess the lowest indicators of socioeconomic than poor supply-side factors, human development development and the lowest Human Development Index factors are also a cause of concern in Uganda. Just over ratings among all countries in the world. With a GNI per one-third (36%) of non-Internet users are digitally illiter- capita of USD 1 820, it is comparable to Rwanda (USD 1 ate, 23 percent stating that they do not know how to use 811) and Mozambique (USD 1 093). Among the surveyed the Internet and 13 percent gave a negative assessment African countries, Uganda is the third least-connected about their need of the Internet. country after Rwanda and Mozambique. Yet, it has higher Internet use than other countries with high GNI MARKET STRUCTURE AND COMPETITION per capita compared in the Global South After Access While the Ugandan market is regarded as one of the Survey. In Bangladesh, a country with a GNI per capita most dynamic markets in Africa in terms of the number almost double that of Uganda’s (USD 3 677,) but a popu- of operators, it remains highly concentrated, rendering lation three times the size, only 13 percent of the popu- competition suboptimal.