How high data prices impact SMEs in Uganda?

by Mmeeme Leticia Luweze
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In Uganda today, it is almost inconceivable to launch a marketing campaign without leveraging social media. Many major brands and organizations have embraced popular platforms, which Ugandans of all ages widely use. Although these apps may initially seem geared toward younger users, a quick scroll reveals that many older individuals are also active on these platforms.

The most popular platforms in Uganda include TikTok, LinkedIn, Twitter, YouTube, and Instagram, among others. These platforms allow many Ugandans to promote their businesses and conduct online sales. Companies like Jumia facilitate online transactions and deliver packages directly to customers, while SafeBoda, a consumer services app, offers ride-hailing services. The Economic Policy Research Centre noted that SafeBoda leverages the internet to create jobs, benefiting over 18,000 registered boda-boda drivers and supporting Small and Midsize Enterprises (SMEs) through reliable deliveries.

Many young entrepreneurs use these social media platforms to showcase products, engage with audiences, and enhance their brand presence. Ugandan youth have utilized social media to promote their business offerings, tapping into the digital gig economy. This engagement has generated employment opportunities and partially addressed the youth unemployment challenge.

These online entities thrive due to one essential aspect beyond a smartphone: internet connectivity.

The Uganda Communications Commission (UCC) reported a substantial rise in internet subscriptions during the quarter ending March 2023. An increase of 1.2 million new subscriptions bringing the total to 27 million. This steady growth is largely attributed to the increased availability of internet access via mobile devices. As a result, internet penetration reached 59 per 100 Ugandans, climbing from 57 per 100 in December 2022. Over the 12 months leading up to March 2023, active internet connections grew by 3.4 million, a 14% increase year-on-year.

The Economic Research Centre highlights the potential of the Internet to expand access to both local and global markets, empowering SMEs to showcase their products and services to a broader audience and grow their customer base. Additionally, the Internet offers SMEs valuable information and resources that enable them to learn, adapt, and innovate.

Uganda has made significant progress in improving internet connectivity and has prioritized Information and Communication Technology (ICT) development in its National Development Plan III, dedicating over 92 billion shillings in the FY 2023/24 budget for ICT development. The government has also expanded free internet hotspots to over 80 locations across the country to improve access.

However, despite this immense potential and the recognition of ICT as a key enabler of socio-economic development and employment creation, challenges such as high internet costs and limited infrastructure persist.

According to a report published by Kamer (2022), the average cost of one gigabyte of mobile internet in Uganda was 1.32 U.S. dollars in 2022. The ICT ministry announced a reduction in internet prices from $70 to $35 per Mbps per month, but this is expected to primarily benefit ministries, departments, and agencies (MDAs) in the short term, with limited immediate impact on the public. Private internet service providers may gradually adopt this change at a later stage, potentially not leading to an immediate decrease in internet costs for the public.

For SMEs in Uganda, the cost of internet access poses significant challenges and can hinder their ability to thrive in the modern economy. The Economic Research Centre notes that, unlike larger corporations with greater financial resources, SMEs often operate on tight budgets, making every expenditure crucial. The cost of internet services, including data plans and broadband connections, can strain their financial resources.

The cost of the Internet directly affects the operational efficiency of SMEs. In an era where digital communication is essential, slow and unreliable internet connections can hinder day-to-day operations. The Economic Research Centre further adds that SMEs rely heavily on a stable and affordable internet connection to remain competitive. High costs can lead to decreased efficiency, delays in communication, and missed business opportunities. This inhibits their use of the internet and limits their ability to harness its full potential.

Top Internet Providers in Uganda

In Uganda, there aren’t many mobile network internet operators, and the most mentioned ones are mainly five. However, out of these five, only two dominate, namely Airtel and MTN. Airtel succeeded Warid Telecom in 2010 and has since grown its customer base to over 8.9 million. On the other hand, MTN was incorporated in 1998 and has grown to a subscriber base of approximately 19 million customers.

The two telecom networks have gained a lot of recognition in the country over time and serve the largest population of people, whether with smartphones or feature phones. However, this has also brought some complaints, as some people have consistently voiced concerns about the quality of services they offer. Among other issues, many Ugandans have complained about mobile data usage and how quickly the mobile data purchased expires on the different telecom networks.

Mobile data refers to internet content delivered to mobile devices such as smartphones and tablets over a wireless cellular connection. Mobile data plans provide different amounts of data each month, with options available at various price points. Airtel Uganda provides a range of data packages tailored to suit different needs and budgets. Airtel offers packages priced up to 5,000 UGX, which provide 2.2GB of data valid for up to 3 days. Additionally, Airtel provides weekly and monthly bundles with varying prices to accommodate diverse usage preferences.

MTN’s smart bundles start at 2,500 UGX, giving users 300MB of data with a one-day validity period. The cost of data from MTN can increase substantially, with packages priced up to 150,000 UGX. These higher-priced packages offer users access to data for up to 90 days, depending on their usage rates.

The #DataTheftExhibition

Although most Ugandans have not frequently complained about the cost of data in the country and its impact on their businesses, many have come to accept the high prices. However, there is growing discontent among Ugandans due to the rapid depletion of data. Some feel they are being overcharged for data that is quickly consumed, despite paying high prices for it. To address these concerns and give the concerns platform Jimmy Spire Ssentongo professional lecturer and a famous Twitter user initiated the #DataTheftExhibition on the 1st of April 2024 through his Twitter account @SpireJim.

Although it lacked a clear independent definition, the exhibition aimed to expose the cheating and exploitation by the two dominant internet firms in Uganda. The #DataTheftExhibition wasn’t the first to highlight various grievances faced by people in Uganda who lacked platforms to voice them out.

In the same vein, Jim Spire Ssentongo had earlier spearheaded the #UgandaParliamentExhibition at the beginning of the year. This exhibition, through Twitter, aimed to expose corruption and exploitative practices within the parliament. This included the misuse of taxpayers’ money, lack of accountability, and extravagant per diems given to members of parliament, among other issues.

Despite the absence of a precise definition, the #DataTheftExhibition garnered substantial online engagement. This was apparent from the numerous reactions and discussions, propelling it to be the most talked-about topic nationwide for over two weeks. To trend on social media, a topic typically requires more than 112,000 tweets to enter the top 10 and over twice that to reach the top three.

On April 1, 2024, cartoonist Jim Spire Ssentongo posted an illustration on Twitter showcasing “the magic of internet data in Uganda.” His cartoon depicted the fleeting joy of purchasing data, only for it to be consumed rapidly, leading users to repeatedly buy more data. This resonated with many, who shared their frustrations with telecom companies and recounted similar experiences.

One Twitter user expressed the growing dependence on data, stating, “Our data usage isn’t just about checking emails or social media anymore; it’s become a necessity. Yet, despite setting data limits, many of us find ourselves doubling those limits. @Airtel_Ug, it’s been five months of stretching our data plans beyond capacity, a clear testament to the ongoing #DataTheftExhibition.”

Another user called for urgent regulation of data billing practices, highlighting the importance of internet access for businesses and the excessive costs: “Ugandans urgently need legislation to regulate how data usage is billed. Internet access has become as vital for business as fuel, yet the cost of data remains exorbitant, with clear indications of cheating on the backend. It’s time for transparency and fairness in data billing practices.”

A different Twitter user expressed skepticism about potential government intervention, citing the significant tax contributions of telecoms and the lack of incentive for change: “It’s unlikely that the government or UCC will intervene in the data theft exhibition. Telecoms are major taxpayers, so as our data purchases increase, their income tax bills grow. Data buyers aren’t a significant voting bloc for the government, and they’re usually peaceful and not inclined to push for government change. We may only receive a statement from Nyombi Tembo in response.”

In response to the #DataExhibition, Airtel announced the launch of the Data Manager tool in the MyAirtel App to address concerns about data usage. The tool offers customers transparency and control over their data usage on a daily, weekly, and monthly basis, including for data devices like Mifi and routers. Airtel emphasized its commitment to digital awareness, customer empowerment, and quality service, providing customer support through a toll-free line, Twitter, and service centres.

Similarly, MTN Uganda stated in response to a civic-led action on social media highlighting alleged issues with poor data services and unexplained MB depletion. MTN assured customers that it takes these concerns seriously and is ready to address specific queries from the exhibition. MTN’s support teams are available through various channels, including social media, a toll-free call line, and service centres.

Government’s Plan

The Uganda Government recognizes ICTs as critical to the delivery of its national Vision 2040. Digital Uganda Vision (DUV) provides the government’s integrated policy and strategic framework of how ICT shall support the delivery of the national Vision 2040 by striving to empower citizens and achieving the goals of universal inclusion, sustainable development, economic progress, and poverty eradication through digital innovation. he Vision aims to provide a wide range of government and private services electronically across multiple sectors, including education, health, agriculture, social security, banking, justice, and communication.

However, Research ICT Africa highlights a significant limitation in the current draft of the Vision: Uganda has one of the lowest internet penetration rates among the 10 African countries surveyed by Research ICT Africa as part of the Global South After Access Survey conducted between 2017 and 2018.

It also notes that “Uganda has a huge urban-rural gap in Internet use of 70 percent, where only nine percent of Ugandans living in rural areas have access to the Internet and about a third (30%) of urban area dwellers use it.”

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