Stopping telcom theft, and why we are broke

One of the most difficult arguments to make in our time is that the cause of our empty pockets is a collective condition artificially created by our governments and foreign merchants.

See, when one is broke – even when they call on their friends for bailout and the friends are equally broke – the easiest reaction is to blame just themselves: “I am not working hard enough,” or “I am unlucky.”

Even Gen Yoweri Museveni has played into this game of guilt-tripping Ugandans. He has called us lazy. He has called us fools. Truth is despite being poor “alone,” it is not because of laziness or foolishness.

It is not lack of business acumen either. One of the major reasons among others is that there is no money in the Ugandan economy. But this is not because this economy is not producing enough money. We are giving labour every day in clearly productive ventures, especially in agriculture.

Ugandans labour in the fields from morning to sunset but return home with empty pockets – sometimes, empty stomachs. This is because humongous amounts of money are being shipped out of Uganda without restraint. One of the money drainage channels is telecoms.

A 2008-2009 estimate showed telecoms, not only underdeclared their incomes – through what they call ‘creative accounting’ – and thus even paid less taxes but also repatriated over Shs 6.6 trillion annually.

It is difficult to tell how much it is now, but with a government that lacks the capacity to thoroughly regulate these giant corporations – which are actually bigger than our governments – and a government with a 100 per cent profit repatriation policy, only God knows how much haemorrhage occurs.

This money is actually our sweat and labour. What corporations call profits is literary the collective sweat of the Ugandan workfolk – including the ladies of the night. But corporations – especially banks, telecoms, coffee dealers – are not only making obnoxious profits, but are also shipping all this money outside of the economy.

It is not just the crude theft where telecom workers/ engineers crudely pull money off client’s phones – as Airtel has come to be exposed recently. But the telecom industry itself needs a complete overhaul: this free- market lunacy is only possible in Uganda.

Across Europe, East Asia, and North Africa, governments actually regulate charges especially on essential goods and services – if they don’t own the provider themselves. A core problem of this state of affairs is that (a) we have failed to learn to count the coins and small bills.

Losing Shs 500 to a telecom company a day is not only affordable to anyone – including folks without employment – but is also ignored as too small. But if a corporation collected these small bills, the loss collectively is humongous.

(b) We are led by folks who not only failed to study any mathematics – cannot count the coins and small bills either – but also have zero sense of the big-picture thinking. They are content to receive commissions and bribes as they sign off entire country’s resources.

A CASE OF AIRTEL

Telecoms sell three main products including voice, data and mobile money. Inside these different products, they have other products they package quite tantalizingly, and price differently. From all these products, they make humongous amounts of money.

This being a claimed free-market economy – where prices are determined by demand and supply – no one regulates these companies as regards their prices. (Recall, however, these corporations – Airtel/Celtel alongside MTN and UTL – actually have monopoly contracts with government of Uganda).

Airtel is claimed to have 16.9 million subscribers. If you considered just half of these subscribers to be using their cheapest product – Airtel Pakalast, which goes at Shs 1,000, you have 9 million X 1k. this is Shs 9 billion. That this product lasts only a day; it therefore means that every morning Airtel Uganda makes Shs 9 billion.

In 30 days, this would be Shs 270 billion. If this figure is carried to 12 months, it means from their cheapest product, Airtel makes Shs 3.2 trillion annually. Read that again. Let us consider mobile money.

There are 12m-16m mobile money transactions daily. With a market share of about 40 per cent, Airtel has charges on every single transaction one makes, including sending and withdrawing. But most significantly, Airtel punishes you for seeking to turn mobile money transactions in to cash.

Uganda still being a cash economy most users will definitely wish to turn their mobile money into cash. Here, Airtel shows its true colours with charges going as high as Shs 18,000. (This does not include government tax, which is a different matter altogether).

Assuming half of these transactions end in withdrawals. If Airtel charged just Shs 1,000 from these withdrawals, that is 7 million transactions x Shs 1000. That is Shs 7 billion daily. In 30 days, Airtel makes Shs 210 billion (monthly) and in 12 months, Shs 2.5 trillion (annually).

Thus, from just Mobile Money and a small Pakalast product, estimated at half their actual market share, Airtel makes a whopping Shs 5.6 trillion. Let’s consider the options: if this money actually remained in this tiny economy – if the owners were natives as is in Ethiopia – fuelling internal consumption and investment, maybe in construction or even luxury goods, our pockets would never be as empty as they are.

Or, if we had been a serious country to cap how much actually leaves the country, then foreign investors would be forced to expand an invest more. Maybe all 40 million Ugandans would be all subscribed to a phone. But I hear one reader shouting “communist” as they ironically push their hands into empty pockets.

Anyways, while I am not arguing for communism – maybe in the next decades – I cry that these humongous amounts actually leave the country just like that. This is only true in poorly-led countries.

yusufkajura@gmail.com

The author is a political theorist based at Makerere University.