Internet tax frustrates SafeBoda operations in Kampala

SafeBoda cashless option

Kampala, Uganda | URN | The recent introduction of a 12 per cent tax on internet data packages is affecting the operations of SafeBoda, a tech start-up founded to modernise informal transportation in Uganda.

Safeboda is accessed by connecting to a mobile application downloaded from the Google Play store for android phones and the App Store for phones powered with iOS technology. For the service to work, one has to open the SafeBoda app, which requires the internet to type in their destination and request a ride.

Upon confirmation, a person is connected to a SafeBoda which picks them from the exact location shown on the app. The app also uses an online tool called Facebook Software Development Kit (SDK) to track the effectiveness and efficacy of SafeBoda marketing campaigns and thus minimize undue communications, and CleverTap, to identify areas within the SafeBoda app that are causing problems for customers.

But Ricky Rapa-Thompson, the SafeBoda co-founder says that the new tax, introduced on July 1, 2021, is a setback to an innovation that is designed to use the internet to propel safe access to mobility, in a country where road accidents are set to match HIV/AIDS as the highest cause of death.

According to Ricky, the tax sabotages the innovations and digital technologies that have increasingly become indispensable to working, learning, public participation, and livelihoods. He says that their operations mainly rely on the internet to serve customers and streamline the industry that is attracting a number of hitherto unemployed young people.

The tax increased the total tax burden on internet use to 30 per cent after the existing 18 per cent Value Added Tax (VAT), making Uganda’s data costs higher than the African average, with 1 GB of data costing up to 8.07 per cent of an average Ugandan’s monthly income compared to Sub-Saharan Africa’s average of 3.1 per cent, according to the 2020 affordability report.

Ricky also questions the timing of the policy adjustments which came at a time when the country was going through a hard economic situation due to the pandemic. At the time the tax was introduced, several businesses had moved online while schools were using online tools like zoom, google classrooms, and Microsoft teams to engage learners after the closure of schools.

Read Also: How SafeBoda’s cashless e-wallet is changing lives of riders

He also highlights that the major challenge to new innovations is that a number of them are not captured in the existing regulations world over. He however hastens to add that governments should push for a legal framework that encompasses the innovations as opposed to frustrating them.

Juma Afema, a SafeBoda rider says the cost of data is affecting their operations because it’s prohibitive for the riders who are expected to stay online all the time to get customers. He adds that this coupled with the increasing cost of fuel has also reduced their profits.

Babu Wahwaka, another motorcyclist says that he temporarily deactivated the app in order to avoid data costs. Instead, he is stationed in one place and waits for only those customers who physically approach him, a problem that had been solved by the SafeBoda innovation.

Uganda recently secured a USD 200 million loan from the World Bank to support access to high-quality and low-cost internet, public services online, a digital economy driving growth, innovation and job creation. Uganda has also in recent years promoted national visions of digital transformation, including the National Broadband Policy (2018-2023) and the Digital Vision 2040.