There has been a deep silence in the industry after the three Ministers in charge of the Finance Dockets in East Africa read their 2009/10 budget. Even the pre-budget analysts, who had predicted doom and pain, have sort of vanished or tried to curve some clever come back arguments on what can qualify as surprise budget speeches to everyone in the region.
The three were probably the most pro-ICT budget speeches ever read in the history of East Africa. This writer has in the past insisted that there needs to be serious allocations for serious ICT projects; and that if there are insufficient resources to initiate the ICT projects we intend to implement, then we either scale them down or just don’t start them.
It was encouraging to see the kind of attention that ICT got from all the three ministers in Kenya, Uganda and Tanzania. In my considered opinion, Kenya benefited the most with both Uganda and Tanzania almost maintaining the status quo.
Honourable Uhuru Kenyatta, the Kenyan minister for Finance, had the largest bag of goodies for the sector. First there was the exemption of value added tax (VAT) for mobile phones, which touched everyone; then ISP were given reason to move to fibre - ISPs can now offset against corporate tax, costs they incurred in acquiring the right to use the fibre optic cable over a period of 20 years.
The minister further allocated US$ 17million to purchase Mobile Computer Laboratories for each constituency for use by our high schools. This initiative is meant to serve as a pilot project, since there are plans to expand the project to primary schools.
The minister also gave a mention to the now famous Digital Villages – which have since been re-branded Pasha Centres - that will be rolled out in partnership with the World Bank. In the same speech, Hon. Kenyatta announced the immediate launch a one million laptop/computer campaign countrywide in partnership with the private sector. This is also meant to increase access to ICT.
In Uganda, Honourable Syda Bbumba, rest her eyes on connectivity. She said the priority in the financial year 2009/10, is in completion of the interconnectivity of the entire country. This project involves laying of over 1500 km of optical fibre to link most major towns in Uganda. She went on to announce that the government will computerize the land registry starting Q1 of the 2009/10.
Most of the taxes were maintained but duty on printers used with computers was waived. This has been a big problem negating the benefit of removing duty on computers. Accessories that accompany computers are still vat-able and some attract taxes across the region.
Hon Mustafa Mkulo in Tanzania had something to hand out to the sector too, reduction on duty on camcorders and digital cameras and he made a tactical adjustment where excise duty on mobile phone services will now be charged at the point of sale of scratch card or airtime at full face value rather than at the point the actual use takes place.
The minister sought to generate revenue from mobile services when he directed VAT on mobile services to be charged on the face value of vouchers at source rather than on discounted wholesalers’ value. This is probably the only hit that the sector suffered this year.
In fact most of the pre-budget analysts had predicted heavy taxation on mobile airtime. Overall, I think the three ministers provided the much-needed relief for the sector to grow and kept clear of the punitive taxation measures that could stunt its growth and development.
For that, I give then a big thumbs up.
