10% Internet levy in Malawi - a step backward

It never rains but pours for us, Internet users in Malawi. While grappling under one of the most expensive telecommunication tarrifs in the world, the government has decided to introduce a 10% levy on Internet, SMS and other data transfer services. In 2013, the government already introduced a 16.5% Value Added Tax (VAT) on Internet services. Apparently the Minister of Finance, in his 2015/2016 budget presentation argues that there has been a "tremendous uptake" of telecommunication services in the country hence the need to increase the tax base through this avenue to finance the zero-aid national budget from local resources. Statistics, however, show otherwise. According to a report by BuddeComm, by the end of 2014, the market penetration rates for telecom services in Malawi were 36% for mobile telephony, 1.9% for fixed telephone services and 6.1% for Internet services. It is clear that there is no tremendous uptake of telecom services in Malawi particularly for Internet services. It is thus a step backward to introduce levies that will stifle the already paltry Internet uptake in Malawi. In this post, I dwell much on how Internet access can promote trade and entrepreneurship in a country like Malawi.

Technologies like the Internet have been shown to promote trade and entrepreneurship even in developing countries as the Internet provides a platform through which manufacturers and service providers can showcase their products and services to a global audience. For example, a tourist attraction whose information has been put online is likely to attract a stream of international tourists. Companies and organizations which have an online presence clearly expose themselves to a larger market audience. This is also true for small and medium enterprises. Simply put, an online presence is a must for any progressive enterprise. Stifling Internet access through Internet levies is therefore a clear contradiction to the policy of promoting trade and entrepreneurship in the country. For further reading, a 2006 paper by Clarke & Wallsten provides insights on the linkages between trade and Internet usage.

The Internet has also provided self-employment among enterprising youths in Malawi. With the prevalent high unemployment rates in the country, some youths have taken advantage of the many opportunities provided by the Internet through businesses like website development, internet cafés, computer networking, etc. With the rising costs in Internet access, many of these businesses will be less patronized hence threatening their very existence. Where is the much touted youth empowerment then?

It is also a fact that an increasing number of Malawians are looking at the Internet as a source of vital information on education, current affairs, business, etc. For example, on the online business directory we are running, Biz Directory MW, we get not less than 100 page views per day with most traffic emanating from search engines such as Google and Bing. And 80% of all search queries come from within Malawi. This empirically demonstrates that many Malawians are increasingly using the Internet as a source of non-trivial information such as business information. Again, we can see that access to the Internet is something that should be encouraged to stimulate entrepreneurship in the country.

Other countries like Rwanda have put technology at the heart of their development strategies and the results are there for all to see. Lets build a Malawi that can escape from the shackles of poverty through progressive policies. Affordable Internet access is a need and not a want.