Internet Rising Costs and What it means for Kenyans

If you live in Kenya you’ll have experienced the steady increase in internet costs as a result of increased excise duty in the recently amended Finance Bill 2018, which adopts a taxation of 15% on Internet Data Services. The result has been a progressive increase of internet package costs as exhibited in the screenshot above. 

Last month, Safaricom slashed the costs of buying internet bundles and has even began providing internet packages that offer subscribers free Whatsapp on select bundles even after the exhaustion of purchased bundles. They say this is in a bid to increase internet penetration amongst Kenyans, and comes after increasing M-Pesa tariffs on the basis of Finance Bill, 2018.

However, on Wednesday last week, Safaricom released a statement indicating that their headline price for voice calls and data would increase by 30 cents and SMS by 10 cents, as a result of the increased taxes passed in the Finance Act 2018.

What then will be the effect of this?

Some of the government’s flagship programmes namely Ajira Digital, The Digital Literacy Programme, Ease of Doing Business (eCitizen) and National Optic Fibre Backbone (NOFBI) all propose to improve access to digital spaces by Kenyans through customised online platforms, skills building and even infrastructure development. However, how will this increase in internet prices impact these interventions? The bottom line is that Kenyans must be able to afford internet services in order to benefit from these initiatives, and that already precarious reality has been threatened further.

This then raises the question of the methodology used by the government to review taxation levels, if at all it exists.

By increasing the costs attributed to getting online, assuming all other factors remain constant, Kenyans are only able to afford a fraction of the internet bundles they were once able to afford before the price increase, thus directly resulting in reduced internet access across the country. It is also important to consider that there will now be Kenyans who are completely locked out of even affording, the cheapest package subscription to internet bundles as a result of this price increase. Simply put, the resulting effect is a step back in the achievement of internet affordability for most Kenyans and even the complete locking out of others from the online space.

Bar reversing the taxes on internet services, what else can the government do?

Public Access Solutions

Introduce more working public access solutions for Kenyans to access the internet for free or at subsidised rates. This would involve making budgetary allocations to include internet access in public areas such as: libraries, schools, local centres, community centres, or public WiFi for use by community.

Policy Impact Studies

The government should adopt a multi-stakeholder model that enables them to form partnerships with organisations that advise them on the impact of various policy reform regimes. By taking into consideration recommendations derived from evidence based research studies the government can more sustainably review legislation to ensure maximum positive outcomes and minimal risk of negative outcomes on the economy and livelihoods.

The African Continent

According to Africans online, the internet has had a positive impact on many aspects of society, including education, the economy and personal relationships.

In the past couple of months some countries in the Africa region have undergone a different type of ‘internet taxation’, with Uganda taxing social media and Benin imposing a social media tax, that was fortunately later repealedCurrently, the internet has only penetrated 35% of Africa’s population, what does increased internet costs as a result of taxes do to this number? What is the eventual effect on aspects of economy, education and personal relationships?

How has this increase in internet costs affected you? What are you doing differently to adjust to this increase? We’d like to hear from you! E-mail us at research@ihub.co.ke or comment below.

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