How Tanzania can attain digital transformation

Under the theme “Investing in Digital Transformation for a Sustainable and Inclusive Future: Vision 2025”, the participants pondered ways in which Tanzania can best achieve its digitalisation goal.

The event, organised by Mwananchi Communication Limited (MCL), was held at Dar es Salaam Serena Hotel.

According to the Global System for Mobile Communications Association (GSMA)'s research on mobile services in Sub-Saharan Africa, Tanznia faces some barriers including affordability of service and devices, digital literacy.

Other challenges include availability of relevant content in the right language, security and trust and supporting infrastructure.

According to GSMA, affordability of digital services was the main challenge hindering digitalisation in Sub-Saharan Africa, including Tanzania.

Discussants at the forum wanted the affordability issue be immediately addressed to enable consumers to go online and make Tanzania achieve its goal of reaching the 80 percent broadband penetration goal by 2025.

Yesterday, the Minister for Information, Communication and Information Technology, Mr Nape Nnauye commended MCL for organising the event, saying the discussions provided new thoughtful ideas to renew the dedication, commitment and concerted action on digital transformation.

He called for a united action to make the ambitions a reality and to achieve the partnership and collaboration that transcend boundaries and sectors.

 He noted that the ministry was in the final process of releasing a 10-year National Digital Economy Framework (2023-2033) which is the result of inputs of private and public stakeholders via technical sessions that the ministry pioneered.

“Digital economy framework creates a ground breaking initiative aiming to significantly enhance the utilisation of digital technology in both government and private sector services.

“Through the framework, the government will continue to invest in and expand ICT infrastructure and internet connectivity to bridge the digital divide and ensure connectivity reaches every corner of our nation,” he said.

He hinted that the government will release the national ICT policy, the Startup Policy, Digital Public Infrastructure Blueprint and Digital Strategy for National ICT Infrastructure Development Plan in the next three months.

Mr Nnauye said the government has signed a strategic deal worth Sh275.5 billion involving the Universal Communication Services Access Fund (UCSAF) and telecom companies for the implementation of projects geared to ensure the availability of communication services in rural and urban underserved areas where 758 communication towers will be installed.

The deal also aimed to boost the capacity of about 400 communication towers. “I want to commend telecom companies for their support in making the plan a reality,” he said.

He noted that the government was extending the national ICT backbone by adding 4,442 kilometres of optic fiber to cover more districts which will enhance broadband penetration in the country including the underserved areas.

“The government will continue to invest in the national ICT backbone to reach all districts so that we attain broadband penetration of 80 percent by 2025 and beyond,” he said.

 He said statistics showed that registered mobile phone subscriptions have increased from 55.7 million in April 2022 to 62.3 million in April 2023.

Internet users have increased from 29.9 million in April 2022 to 33.1 million in April 2023, reflecting an increase of 10.7 percent. “So, we are moving… probably not enough, but we are moving,” he said.

Address taxation issue

Although they commended the government for its efforts to expand broadband connectivity, they also advised that the country needed to review its taxation on mobile services to facilitate easy access to digital services.

“What do we need to address for consumers to actually be able to go online for Tanzania to achieve 80 percent broadband penetration by 2025? It's affordability, nothing else," said the GSMA director for public policy for Sub-Saharan Africa, Ms Caroline Mbugua.

According to GSMA data, the level of taxation in the mobile industry is almost double that of the whole of the Sub-Saharan Africa.

Tanzania accounts for 47 percent of total taxation in mobile services against 22 percent in region.

This, she said, meant that the service in Tanzania has almost doubled compared to the rest of the region.

"There is a need to re-examine taxation on mobile services in Tanzania," advised Ms Mbugua.

In terms of financial inclusion, Tanzania is at 52 percent with the potential to catch up with Uganda (66 percent) Kenya, (79 percent) and South Africa (85 percent).

Launched in 2008 in Tanzania, mobile money has driven financial inclusion by improving access to affordable and accessible financial services for underserved populations. However, the service has been slowly adopted as compared to other countries in the region.

According to the Tanzania Communications Regulatory Authority (TCRA) quarterly report, mobile subscribers have reached 61.9 million as of March 2023, but only 44.35 million are subscribed to mobile money services.

Ms Mbugua advised the government and mobile service providers to think outside the box when looking to provide jobs for the people so as to be able to afford mobile service, hence more digital use.

She said: "This is a great opportunity, but when you look at the level of affordability of mobile services to be able to do digital trade, it means that a trader in Tanzania will be disproportionately disadvantaged compared to a trader in another country."

She insisted that the more affordable services are, the better an individual's chance of competing in the market.

"Like other sub-Saharan African countries, mobile financial services are what drives financial inclusion in Tanzania. Consequently, the more mobile services are affordable, the better and more inclusive financial services will be,” she explained.

Impact after reduction of the levy

Mr Joseph Lyimo, Tax Partner at PwC, said that telcos have now become the biggest contributors of excise duty and VAT after the government reduced the imposed levy by 50 percent.

“You will be surprised on how a small change can have such a big impact, because the 50 percent reduction of the levy last year has made the ICT sector to record a  13.3 percent growth raised its contribution to the GDP from 2.8 percent to 5.2 percent,” he said. This, he said, was quite significant because it increased the number of transactions.

He said the TRA report of March 2023, showed excise duty and VAT contribution had grown up to 22 percent with telecom contributing Sh622 billion by March, this year. “This is just an effect of lowering the levy by 50 percent.

Universal Communication Services Access Fund (UCSAF) CEO, Ms Justina Mashiba, noted that the government has always tried to make rural populations contribute to the national economy by partnering with telecommunications providers.

“When we are talking of the digital economy, there is no way we can digitize the economy without connecting the unconnected in rural areas… we cannot achieve the goal of collecting more taxes if we don’t really connect the unconnected,” she noted.

To get more Tanzanians online, Philip Besiimire, the managing director of Vodacom Tanzania, said plans to make smart phones available and affordable were needed, noting that once the fraternity gets to that point, most people would access opportunities.

“This is the area that the government needs to work on especially in curbing the barriers including costs. We need to work jointly, as some solutions will be government led and others private sector led,” he said.

Former diplomat, Ambassador Ami Mpungwe said: “To have the meaningful digital transformation, the tax collection instruments should be applied in a manner that encourages growth rather than discouraging it.”

“Because digital transformation can give us exponential growth, then we have to look at the overall policy on digitalization and put it in a manner that supports our goal," he said.

Another participant, Diana Ninsiima, said, “Who trains the common mwananchi? We need to be doing massive digital literacy if we are to get anywhere close to the masses tapping into this digital transformation. We are speaking the language of the literate and not the illiterate."