Uganda has recently been shown to have the highest cost of data in the world, ousting only Ivory Coast.
Surf Shark, a VPN service company, did a recent report that showed that of the 117 countries monitored, Uganda ranks 116 in cost of data.
This is a result of external costs incurred by the country’s telecommunications industry. Uganda Communications Commission (UCC) Executive Director Irene Kaggwa Ssewankambo noted that this issue spanned across the entire sector as every service provider in the country is obligated to spend on said costs.
“As consumers, we desire to pay the cheapest we can and thus usually enjoy price wars among providers, but this can have an adverse impact in the medium to long run due to providers ending up operating below marginal cost and being forced to compromise on quality to deliver the price desired by consumers and collapse of some companies.” She said.
The metrics used to measure the cost of data in Surf Shark’s report include Internet quality, affordability, e-security (such as information security), e-government (public services offered online), and e-infrastructure (the combination of digital technologies, resources, communications, and the people needed to manage them).
Uganda’s cost came up so high due to several factors. The first according to Ms. Ssewankambo is that as a result of the economy, the spending pattern of all Ugandans shifted, this also applies to how much was paid for data.
Another prominent reason was the rise in diesel prices. As the cost of operation for the telecommunication industry in Uganda increases, so does the amount they charge for their services.
Taxation also plays a huge role in increasing internet costs. According to the Monitor, a Ugandan publication, “The tax regime is also a big factor. After getting rid of the Over-The-Top (OTT) tax, the government imposed another tax of 12 percent on the net cost of Internet data, after which an additional 18 percent value-added tax (VAT) will be charged.
The controversial OTT tax, sometimes referred to as the “social media tax” was implemented on July 1, 2018. It costs Ugandans Shs200 per day to use more than 50 platforms, including Facebook, Twitter, and WhatsApp. The social media tax would discourage Internet use and fall short of its revenue goals.”
The country’s internet user base is another factor that constitutes an issue as the country has an internet penetration of only 20%. Experts believe that the more people use the internet in the country, the more the telecommunications industry would be incentivized to cut down on pricing.
And finally, a key reason why the cost of data is high is the expenses of backhauling across Kenya and Tanzania and bringing services into the nation from fiber links at the coastlines. Kenya’s topography also makes it commercially un-advisable to rely solely on routes through that country.
