A Case For Tax-Exempting Home-Internet Connectivity In Botswana

On the first of this month, as with every first day of the month, I got my internet usage invoice from my ISP. Now I must admit, financially, 2022 has been a hellish ride. Luckily for me, my ISP (shoutout OPQ) gives a 15-day allowance between receipt of invoice and payment so that gave me some breathing room and time to settle the invoice.

For me, the internet is a core necessity. I cannot afford to not pay it. It is where my livelihood is. As the world also rapidly moves online, for most Batswana too, the internet is becoming a basic need. Despite this obvious fact, the internet, more specifically home connection internet, is still pretty much a luxury and privilege only afforded by mostly the upper-middle class. For most people, the only solace for internet connectivity is bundled packages provided by mobile operators, the most economic of which only offer connectivity to social media apps.

The internet is much more than social media. Social media is but a tiny subset of it. So as much as access to social media through these bundled packages is welcome, it is not enough. It actually misconstrues the value that can be offered by the internet. Most parents of school-going young people probably reply with "o batla go senya nako ka bone bo Facebook akere" whenever these young people ask for home internet connection because that's what they understand the internet to be for. 

The government also appears to recognize the value of the internet in their quest to advance their "knowledge-based economy" mandate but are they doing enough to make connectivity for Batswana affordable? I personally think not. Much noise can be made about the 4IR and many launches of digital products can be made but without access to affordable internet, most Batswana will not reap the benefits of such initiatives and the country will continue to lag behind in digitization.

Botswana already has a huge inequality problem and instead of helping to close down this gap as it has in other countries, it looks like in Botswana, digitization will actually widen this gap as only people who can afford internet connectivity will reap the benefits. In my opinion, the one way for government to prevent this from happening and actually make the benefits of digitization inclusive is to make internet connectivity affordable for the majority of the population and one way to do this is to make home internet connectivity services tax exempt.

Before I proceed, I must give a disclaimer that I am no tax expert and I'm simply a citizen trying to find means to make internet affordable for most of my fellow citizens so that they can move online like the rest of the world. With that out of the way, I personally think that tax exempting internet services will make it much more affordable and possible for low-income households to get connected. Every month I look at my internet connectivity invoice and see that 14% VAT fee, I wonder how many Batswana it is excluding from being able to afford connectivity, and with a country with dwindling household incomes, it is probably a lot.

The recently released Statistics Botswana report on its Multidimensional Poverty pilot study found that 20.9% of Batswana are multidimensionally poor with 3.9% classified as extreme. One of the dimensions used to determine the index was " access to ICT or computer use", a core part of that being internet connectivity. Simply put, the study by Statistics Botswana shows that lack of access to ICT services like computers and the internet is a contributing factor to almost 21% of the population being considered "multidimensionally poor".

This fact shows the urgency by which internet connectivity should be made affordable in this country. We cannot preach digitization if we are failing to make the foundation of this very process, internet connectivity, affordable to most households. Until we can get to the point where the majority of households have as easy access to internet as other services like water, electricity, sanitation, etc our 4IR ambitions will remain only that, ambitions.

The internet has the potential to contribute significantly towards alleviating Botswana's most pressing socio-economic woes such as unemployment, poverty, and income inequality and increasing its human capital. But if connectivity is not made equitable as is currently the case, it can serve to make these woes even worse, like as aforementioned with inequality as upper classes become the only ones reaping the benefits of the internet.

I believe that making connectivity affordable by removing the VAT associated with it can go a long way in making this equitability possible and help catalyze the country's march towards the much alluded to 4th Industrial Revolution. Having more people affording to have connectivity will mean more competition for the provision of internet services which will force ISPs and mobile operators to reduce prices and increase the quality of services, a situation that will benefit both sets of consumers being those who use home internet as well as those who rely on data bundles.

For rural dwellers who mostly rely on data bundles offered by mobile operators for connectivity, a reduction in prices of bundles mean that they can finally afford not only social media bundles but also full internet access bundles which will allow them to truly reap the benefits that come with having access to the full scope of the internet and not just a subset of it being social media. This will help foster inclusive and equitable digitization.

Obviously, the suggestions in this blog post are high level and severely abstracted and they leave out much of the intricacies that are to be considered when drafting tax laws but my hope is that, in the upper echelons of the Government Enclave, this option is at least a consideration in national development conversations going forward.