Deputy Minister for Communications, Science and Technology,
Hon January Makamba
---*I did nothing wrong as deputy minister to instruct TCRA
I
read with particular interest an article published in the May 25
edition of this newspaper titled ‘Collective responsibility and emerging
anarchy in state policy’ by Ani Jozeni. The article would not have
warranted a response if it were not so elegantly written, so blatantly
misleading and wrong on both facts and logic.
I am taking the liberty to respond so as to correct certain factual
errors and flaws in logic, and offer him and the readers a bit of
understanding about the telecoms sector.
Jozeni’s gripe is twofold: one, that it was incorrect for a government
leader to ask Tanzania Communications Regulatory Authority (TCRA) to
take up with mobile phone operators an issue about poor mobile phone
services and that we, who do not reside at the Treasury, must not
complain about poor tax revenue collection from telecoms companies.
Two, that a deputy minister should not be talking about these things
because of his imagined possibility that the minister may be having
different thoughts.
You only need to possess a mobile phone to know that the quality of
service – the rate of dropped calls, failure to initiate calls,
unsolicited SMS, customer service issues and so forth – has been a
source of complaints by many subscribers. There are specific regulations
in the TCRA Act to do with the quality of services offered and the
parameters to be adhered to by the operators are clearly stipulated.
It is absolutely the right thing to ask TCRA, which, by the way, is
doing a fantastic job, to ensure that mobile phone operators are within
these parameters because TCRA is ultimately responsible for the
enforcement of the Act and its regulations.
You only need to be moderately informed about public affairs to know
that low tax revenue collection from mobile phone companies has been an
issue of debate in the National Assembly and by the general public.
Now, what do the numbers say? In 2010, mobile phone companies grossed
about US$ 1 billion, and paid corporate taxes amounting to US$1.7
million, according to a brief provided to me by TCRA during my visit to
their office. During the same year, taxes paid by mobile phone operators
in Kenya amounted to US$78.3 million, Uganda US$31.3 million and Rwanda
US$14 million.
Surely, you could argue that Kenya’s economy is bigger than ours, but
Rwanda, a much smaller economy compared to ours and with two major
mobile phone service operators, collected taxes from the companies close
to tenfold than we did – with our six main mobile phone service
operators.
To be sure, no one is suggesting that mobile phone service operators
broke tax laws here. But anyone with the right mind will see that we
could do far better than we are doing, and stating this, as I am doing
now, is really stating the obvious. Effective taxation is done through
timely and effective collection of information on businesses. Asking the
responsible authorities to ensure that we do just that is the right
thing to do.
To put the facts correctly, the two-week period reportedly issued by the
deputy minister was for mobile phone operators to detail their plans to
deal with their customers’ complaints about the quality of service, not
to sort out tax issues. Still, Jozeni’s idea that we can’t talk about
taxes now simply because the parliamentary budget session is less than a
month away is being shortsighted.
Firstly, the country has a future beyond budget sessions, and, secondly,
revenue measures can be adjusted even on the morning of budget day.
Also his notion that only the Treasury – and not any other government
ministry – should be concerned with government revenue is simply
ridiculous.
TPDC, a regulator of upstream oil and gas activities, in undertaking its
duties, including the auditing of production sharing agreements (PSA)
with oil and gas companies, helps TRA collect a deserved amount of
taxes. I could go on about how cooperation by different government
entities is not only important but necessary in ensuring the right
revenue measures are taken with a view to effective tax collection.
TCRA early in May announced a tender to procure, install and operate a
mobile phone traffic monitoring system (TMS) which, among many other
good things, will help us determine, and indeed track, the amount of
minutes dialed and the SMS volume and therefore independently (yes, by
ourselves) verify the amount of government revenue that could be due
from the mobile phone companies.
This is where the nexus between the TCRA initiative and government
revenue is found, a connection that Jozeni missed because, in his line
of thinking, all initiatives relating to government revenue “start and
are concluded at the Ministry of Finance”.
Last year, mobile phone operators reported that a total of about 20
billion minutes were dialed. We have no reason to believe that the
operators lied about this number, but would it not be nice if the
government, through TCRA, could verify the number on its own without
relying on reports by the operators?
In 2010, Ghana’s TCRA deployed a more or less similar tracking
technology to monitor just international calls traffic in and out of
Ghana, and, within a year, in 2011, Ghana’s TRA increased its revenue
collection from telecom operators by US$40 million, which was over and
above what they were collecting before.
It is important to point out here that the culprits causing government
loss in revenue include unscrupulous private individuals who do
‘SIM-boxing’ – that is, routing international calls and terminating them
to a simple device set up in their homes and then connecting them here
locally using local numbers. That’s the reason you sometimes receive an
international call with a local number on your caller ID, thus depriving
revenue to both telecom companies and the government.
Therefore, it can’t be so disastrous, as Jozeni would want us to
believe, for a government leader, be it a minister, deputy minister or
PS, to call for measures against this and other malpractices.
Obviously, the contribution of the telecoms industry to the country’s
economy goes beyond taxes. I need not list here all the benefits
accruing from telecoms sector investments in the country as they are
obvious. But the fact remains that the sector could contribute far more
than it is doing now. And one of our tasks at the ministry is to ensure
that it does.
At the moment the telecoms sector’s contribution to the country’s GDP
stands at a paltry 2.5 per cent. However, in Kenya, its contribution is 9
per cent while in Uganda it is 5.2 per cent. The 2.5 per cent
contribution is at a glaring variance with the scale and pace of the
sector’s growth.
Last year, the sector grew by about 22 per cent. Thus far, it is the
fastest growing sector and the growth has been steady for the past 10
years. Between 2001 and 2010 it grew at an average of 11 per cent per
year while the GDP grew at an average of 7 per cent.
Total cumulative investment in the sector during the same period
amounted to Shs. 2,563 billion. On average, telecom companies invested
about Shs. 256 billion per year. Also, the mobile penetration rate
increased by 53 per cent per year (on compounded annual growth rate)
from the year 2001 to 2010. With this rate of increase in penetration,
telecoms economists suggest that the industry’s contribution to the GDP
should have been at least 5.3 per cent, not 2.5 per cent!
With these numbers I would like to tip off Jozeni to expect us who are
charged with the development of the sector to continue talking about and
working for more government revenue from the sector and for its
increased contribution to the economy. I communicated this message to
TCRA and the mobile phone operators that I visited recently. The
encouraging thing is that almost all the operators I visited were
committed to ensuring that the sector contributes more, and their future
plans indicate this commitment.
While the issues of telecoms taxes and contribution to GDP are
important, it will be unfortunate if the discussion on role of the
telecoms sector to the economy and improvement of people's lives remains
solely on these matters. A lot has been done in the sector over the
past 10 years, including an increase in financial services inclusion
facilitated by Mobile Money. Just last year alone, mobile money services
grew by 293 percent. An average distance to a bank is 50 kilometers,
but thanks to the explosion of telecoms Mobile Money services,
Tanzanians can find money transfer and other financial services within
one kilometer.
The debate we should be having is whether this Mobile Money financial
intermediation catalyses economic growth or is it just sheer money
circulation with little impact on promoting consumption in the real
economy or in fact contribution to savings and investments that spur
wealth creation? Is the current regulation on mobile money sufficient to
deal with issues of fraud, money laundering and customer protection?
Another discussion I am keen to have is what is the best model to get
telecoms services access to areas that don't have access - areas that
are deemed "commercially not viable" by telecoms operators, so that
geography, settlement patterns and income levels do not deprive some of
our people the benefits of telecoms services.
Also, of the Shs 1.6 trillion revenue grossed by telecoms operators in
2011, Shs 1.3 trillion came through voice services. Now that we have
fibre optic network in most of the country, how do we move the sector to
the next level, beyond the dominance of voice services, to the
applications of more and sophisticated IT services and products? How do
we create a critical mass of ICT entrepreneurs and hubs of innovations
to create ICT solutions to our development and governance challenges?
These questions, beyond telecoms revenue, occupy us in the Ministry and
in associated institutions such Costech.
I talked about all these issues during the past weeks. Policy criticism –
and indeed ideas – on these matters by Jozeni would have been
heartening.
Jozeni also seems to be obsessed with titles: minister and deputy
minister, and who can say or do what. This is a trivial matter, given
the momentous task ahead of us to fix challenges in the telecoms sector.
Everyone in government speaks on and executes government policy. In his
article, he fails to point out where and which government policy was
contravened.
He also fails to point out where the minister and deputy minister have
contradicted each other. He eventually settles on the hypothetical
“suppose the minister doesn't countersign the deputy minister’s
directive…”. Well, on the flip side, suppose, as is the case now, the
minister and the deputy minister speak the same language? Then his whole
argument collapses, as it surely does.
Sure, the government has had its fair share of challenges in
coordination and public communication, but Jozeni’s article misfired as a
hit-piece on me and on this challenge.
As far as leadership style is concerned, Jozeni suggests that former
prime minister, the late Edward Moringe Sokoine, the Member of
Parliament for Vunjo, Mr. Augustine Lyatonga Mrema and myself are cut
from the same cloth. If one entertains the idea that Mrema’s name here
is misplaced, I would be flattered.
