The Ugandan government has followed Kenya in taking the extreme step of introducing a tax on mobile money, punishing consumers for a financial blackhole entirely of the government’s making.
When Kenyan finance minister Njeru Githae introduced his country’s tax on mobile money transactions, it was to cover the US$300 million cost of wage increases for state-employed teachers lecturers and doctors after a spate of strikes, punishing Kenyan consumers for the lack of thrift at the highest level.
Now the Ugandan government has followed suit, but this time it is an even more self-inflicted financial impasse that is set to cost citizens. Minister of Finance Maria Kiwanuka’s tax on mobile money, which she hopes will raise US$12 million annually, has resulted from cuts in donor aid to the country after a report accused it of endemic corruption.
In October, the East African nation’s auditor general reported more than US$13 million in aid funds had ended up in unauthorised bank accounts, with prime minister Amama Mbabazi at the centre of the allegations. Western donors such as the United Kingdom, Germany and Denmark suspended aid, which the Ugandan government relies upon for 25 per cent of its budget.
Faced with a financial blackhole and the need to fill it, the Ugandan government, rather than properly tackle the corruption that resulted in the aid withdrawal, has chosen to punish its own citizens for its misdeeds.
Not only have Ugandans now been robbed of funds donated to fund reconstruction and resettlement in the country’s northern region, blighted for so long by Joseph Kony’s Lord’s Resistance Army (LRA), they must now pay out of their own pockets to reduce the resultant budget deficit. Users of mobile money services and those who make international phone calls may legitimately ask why the burden must now fall on them to bail their government out when international donors consider it to be too corrupt to be worthy.
HumanIPO has carried articles condemning mobile money taxes before, but with this latest development it is evident that East African governments have not learnt that taxing a growingly important social and economic service for the sake of plugging self-imposed holes is cynical and misguided.
